A rise in the age at which people can access their private pension could force some savers to rethink their plans for retirement.
The “normal minimum pension age” – the age most people can start to take their work and private pensions – is already set to increase from 55 to 57 in April 2028.
A further rise has not been announced, but some experts suggest the age could increase again – to 58 – in the late 2030s, potentially alongside a rise in the state pension age.
The policy would keep people saving for longer and reduce the risk of pension money running out during retirement.
But for those hoping to cut their hours or stop work in their mid-fifties, perhaps to care for grandchildren, another increase could make those plans harder to achieve.
So, what can savers do if the goalposts move again? We asked the experts what it could mean and how people can prepare.
Don’t put all your eggs in one pension
If you put money into a pension, you may not be able to use it as early as you’d hoped if the pension age rises.
Tom Selby, director of public policy at AJ Bell, said: “Clearly, if government chose to increase the minimum access age further – say, to age 60 – this would impact more people, in particular those who have plans to retire early.
“In these circumstances, boosting your pension won’t really help because you won’t be able to get at your money to fund early retirement.”
That is where an ISA can play a different role. Unlike a pension, an ISA is not subject to the normal minimum pension age and can therefore be used to fund spending before pension benefits become available.
Of course, you won’t get the tax relief paying into an ISA that you do with a pension, though the gains are tax-free and you can put in £20,000 each tax year.
Selby added: “You can use things like ISAs, which can be accessed flexibly, to provide an income bridge between the point you want to retire and whatever the minimum pension access age is.”
For people planning an early retirement, that could mean building two pots with different jobs – a pension for later life and accessible savings to cover the gap.
Craig Rickman, personal finance expert at Interactive Investor, said: “The frequent shifting sands within pension legislation illustrates why it’s so important to build flexibility into your retirement strategy, diversifying savings across various tax wrappers, such as ISAs.”
Check if you’ve got a valuable pension right
A future rise would not necessarily affect everyone in exactly the same way.
Some pension savers have a protected pension age, depending on the rules of their scheme and their circumstances, and would be unaffected by an age increase.
It means its important to check rights before transferring a pension. An older scheme may contain an early access right that is more valuable than it first appears. Moving it elsewhere could affect that protection, depending on the circumstances.
Sir Steve Webb, former pensions minister and now a partner at LCP, said: “The rules around when you can keep access at 55 [rather than 57 under the rules from 2028] and how this is affected by a transfer are complex, so it’s worth making sure you know where you stand before any transfer, so that you don’t accidentally lose the privilege.”
You’ll likely have plenty of notice
Experts have pointed out that governments usually give plenty of notice before making pension rule changes.
David Little, partner in financial planning at wealth management firm Evelyn Partners, said: “The impact of this, being such a long way down the road, will not affect most pension savers too dramatically as they have plenty of time to plan for it.”
But the more immediate planning risk is people continuing to work from outdated assumptions.
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