Changes to pension age - did you notice?

Date Published: 12/10/2020 11:35

You may have seen the news last week about the state pension age rise to 66, but have you also seen the news about changes to when you can draw down other pensions? Our financial planner Emma Baumback explains the changes.

Treasury Minister John Glen has confirmed plans for legislation to increase the minimum pension age from 55 to 57 from 2028. 

The Government first announced these plans in 2014, reflecting trends in increased life expectancy and also encouraging individuals to remain in work. 

The increase will coincide with a state pension age increase to 67. The logic behind this is to manage the risk of individual’s drawing down their pensions too early.

Whilst this may not be welcomed news to those currently reassessing their work life balance, the increase will allow investors to save more into their pension pots and hopefully maximising the sustainability of their income in retirement. 

The Government have taken a sensible approach by giving advanced warning, intending to effect this change from 2028, allowing pension savers enough time to adjust and make changes as necessary.

The change will affect workers currently aged 47 and under.  Having this clarification from the Government after being in the pipeline for so long, allows us good time to start planning ahead. 

For those still wishing to retire at age 55, we will need to look at other forms of savings to bridge this gap.  It is also important to review other aspects of your financial position, such as looking at the options for existing mortgages and loans, building up ISAs or Lifetime ISAs and importantly undertaking a pension review if you haven’t done so recently.

If you would like to review your retirement plan, please get in touch for a free initial consultation.

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