Government Confirms Private Pension Age to Rise to 57

Ian Lewis[1]

Ian Lewis

Money Savings Advice Government Confirms Private Pension Age to Rise to 57

The minimum age for private pensions is set to rise to 57, the government has confirmed.

It first announced its plans to raise the age for private pensions in 2014, but when no new legislation emerged, doubt was cast on whether the change would ever take place.

However, a question raised in parliament on Thursday confirmed that the plan to increase the minimum age for private pensions is still in the pipeline and expected to come into force in 2028.

In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life. That announcement set out the timetable for this change well in advance to enable people to make financial plans and will be legislated for in due course.

said Treasury Minister John Glen

As things stand, savers who pay into a private pension through their employment or on their own can access their savings when they turn 55.

Under the new rules, anyone currently aged 47 or younger will not be able to tap into their private pension savings until they turn 57 years old.

The age for the state pension is currently 65 years old and is set to steadily increase for younger swathes of the population until it reaches 67 across the board in 2028.

While the new legislation will bring private pensions more in line with state pensions, the changes are likely to have a particularly strong effect on savers who are due to retire around the cut-off date.

It will be particularly impactful on those who were due to reach their 55th birthday just after the cut-off, sometime in 2028. It's now imperative that both government and industry make sure this change is clear to all those saving in pensions. We can't afford a repeat of the government communication gaps which left many women to find out too late that their state pension age was increasing from 60 to 65.

said: Pensions directors at Aegon, Steve Cameron

Successive changes to womens' state pension age since 2010 led to legal challenges from campaigners who say that 3.8 million women were not left with enough time to plan for the impact of the changes and lost out on thousands of pounds as a result.

There is a case being heard in the Court of Appeal brought by campaigners against the government, who they say discriminated against them.

Thursday's mention of the changes to private pensions may come as something of a surprise to many, as there has been little mention of the plans in the press since they were first announced by former Chancellor George Osbourne in 2014, under the Cameron-Clegg coalition government.

While the renewed interest in the upcoming changes will help those who are affected to plan their finances, some say the timing is a 'kick in the teeth':

Any increased restriction on access flies in the face of pension freedoms and feels like an extra kick in the teeth at a time when many people are reassessing their work/life balance after a terrible year socially, emotionally and economically.

Interactive Investor's head of personal finance, Moira O'Neill, told industry outlet, Pensions Age

 

Money Savings Advice Author Ian Lewis

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

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