UK Economic Secretary to the Treasury, John Glen confirmed earlier this month that the minimum pension age will increase from 55 to 57 by 2028, in line with the ‘trends in longevity’ and the rise in the state pension to 67. And this could have an impact on the age your transferred pension becomes accessible, too.
An exact date for the change has not been provided, and Glen pointed out that plans will be defined in due course. In the meantime, savers who were looking to access their ‘pension freedoms’ should have enough time to adjust their retirement plans. In particular, the change will have an impact on those due to turn 55 in 2028 (just after the cut-off), who will have to wait an extra two years before withdrawing their pension funds.
How this impacts UK Pension Transfers
Under the current ‘pension freedom’ rules – introduced with the Pension Schemes Act 2015 – individuals aged 55 and over can select how and when to access their savings.
Initially, ‘pension freedoms’ only applied to pension funds in the UK, but in 2017, the rule was extended to QROPS. Savers who have transferred their UK pension to a New Zealand QROPS can therefore access their savings in full at 55.
However, this is likely to change when the new minimum retirement age increases in 2028. So if you’re planning to withdraw your pension funds early, it’s important to plan accordingly; depending on your age, you may need to wait a further two years before your savings are ‘unlocked’.
Of course, there’s still a bit of time to ponder your options, but if you have any questions at all about the implications of this change for your financial future, please don’t hesitate to contact us.
Pension providers urging more detail
The announcement has received a mixed response from UK pension providers. Aegon pensions director Steven Cameron called for more clarity: “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 late that their state pension age was increasing from 60 to 65.”
John Greer, head of retirement policy at Quilter, stressed that early retirement needs to be planned carefully, to ensure funds last throughout retirement: “A few diligent pension savers are lucky enough to be able to afford to retire at 55 with a pension pot sufficient to last for the rest of their lifetime. Given future increases in state pension age, it means you will likely have over a decade drawing on your own savings before any state support kicks in.”
For Darren Philp, director of policy at Smart Pension, the suggested timeframe allows savers to plan, as long as details are communicated clearly: “We would encourage the government to legislate as quickly as possible to implement this so the industry can communicate the change with confidence.”
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