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Government confirms pension-freedom age hike to 57 in 2028

Including Financial Independence and Retiring Early (FIRE)
Itsallaguess
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Government confirms pension-freedom age hike to 57 in 2028

#338011

Postby Itsallaguess » September 4th, 2020, 5:57 am

The government has confirmed it will increase the age at which people can access their pensions from 55 to 57 in 2028.

The government first indicated its intention to increase the threshold back in 2014 but did not legislate for it, leaving many across the industry to question whether the change would ever go ahead.

Under current pension freedom rules, which were introduced in 2015, individuals aged 55 and over can choose how and when they can access their savings. But the government said in an answer to a parliamentary question today (September 3) said it will legislate for the pension freedom age hike "in due course".

Economic secretary to the Treasury John Glen wrote: "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."

Steven Cameron, pensions director at Aegon, said: “This latest announcement confirms the change will happen meaning those retiring in future will have to wait longer to access their pension. “It will be particularly impactful on those who were due to reach their 55th birthday just after the cut off, sometime in 2028.”

Mr Cameron warned the government to make sure all savers are aware of this change to avoid another fiasco like the state pension age hike for women born in the 1950s. He said: “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.”


https://www.ftadviser.com/pensions/2020/09/03/govt-confirms-pension-freedom-age-hike-to-57/

Cheers,

Itsallaguess

Darka
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Re: Government confirms pension-freedom age hike to 57 in 2028

#338013

Postby Darka » September 4th, 2020, 6:11 am

Thanks Itsallaguess,

Been expecting this for ages now, just happy that (for me at least) that they didn't decide to make it even earlier than 2028.

Can access mine at 55 in 2024, but will leave it until March 2025 under current plans.

regards,

Itsallaguess
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Re: Government confirms pension-freedom age hike to 57 in 2028

#338014

Postby Itsallaguess » September 4th, 2020, 6:22 am

Darka wrote:
Been expecting this for ages now, just happy that (for me at least) that they didn't decide to make it even earlier than 2028.

Can access mine at 55 in 2024, but will leave it until March 2025 under current plans.


I'm a similar age too, and I was getting very concerned that any required COVID-related tax-raising options might have included moving these goalposts closer again and potentially spoiling what are surprisingly near-term aspirations nowadays, so seeing the Government legislate for a 2028 changeover date would be something I'd hopefully benefit from too..

Of course it would be better all round for them not to have to legislate for this change at all, of course, and I would feel so sorry for the group of people who will inevitably sit on just the wrong side of any proposed change in pension-access dates..

Cheers,

Itsallaguess

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338015

Postby Darka » September 4th, 2020, 6:34 am

Itsallaguess wrote:Of course it would be better all round for them not to have to legislate for this change at all, of course, and I would feel so sorry for the group of people who will inevitably sit on just the wrong side of any proposed change in pension-access dates..


Agreed and I don't think they should be increasing the private pension age as pensions are too easy a target for changes, and they do keep making them...

This is why I've sacrificed tax relief in a pension and put most of our investments in ISA accounts as I intend to retire in 2022 at 52, not exactly FIRE but as close as I can get.

My SIPP which kicks in in 2024, will provide the necessary safety margin and I'm happy to wait for that, but won't postpone my retirement as my wife is older than I and I don't want to sacrifice any years of retirement with her for a few extra £'s.

I may reconsider my plans slightly and take my 25% Tax Free slightly earlier than planned, to head off any potential changes they may decide upon to fix the covid-19 budget....

regards,
Darka

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338024

Postby Urbandreamer » September 4th, 2020, 7:29 am

Not sure that I agree with Darka.

I would/am making as full use of my pension relief as possible. Given that intended, now confirmed, legislation doesn't affect either of us it makes sense to me that I do so.

Like Darka, I intend to crystalize my pension before 2028 at which point it will be a lot more unlikely that the government can cause issues with my pension.

If we were to consider those that it does affect, or who may be subject to even later legislation, then my attitude changes to be more in line with Darka's. IMHO there are very strong arguments about the situation of buying a pig in a poke that the government has made pension investments into.

Re Mr S Camerons words, can I encourage us all to let our younger friends know of this change.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338043

Postby Darka » September 4th, 2020, 10:08 am

Urbandreamer wrote:Not sure that I agree with Darka.


My fault, I wasn't 100% clear.

Whilst I don't contribute to my SIPP directly, I do salary sacrifice through work at a combined rate of 32% of pretax salary, soon to be 36% as their contribution is increasing soon so I do get some benefit from tax relief, just not as much as I could.

regards,
Darka

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338056

Postby moorfield » September 4th, 2020, 10:46 am

Itsallaguess wrote:
Steven Cameron, pensions director at Aegon, said: “This latest announcement confirms the change will happen meaning those retiring in future will have to wait longer to access their pension. “It will be particularly impactful on those who were due to reach their 55th birthday just after the cut off, sometime in 2028.”


https://www.ftadviser.com/pensions/2020/09/03/govt-confirms-pension-freedom-age-hike-to-57/


Do we know when the cut-off date actually is? Would it be January 1 - the start of the calendar year - or April 6 - the start of the financial/tax year?

This is of particular interest to me because I will be 55 in January 2028 .... :?

Darka
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Re: Government confirms pension-freedom age hike to 57 in 2028

#338057

Postby Darka » September 4th, 2020, 10:48 am

moorfield wrote:Do we know when the cut-off date actually is? Would it be January 1 - the start of the calendar year - or April 6 - the start of the financial/tax year?

This is of particular interest to me because I will be 55 in January 2028 .... :?


They haven't announced it yet, but wouldn't be surprised if it matched the end of the tax year in April.

So you might be safe...

EDIT
Just found this:

Steven Cameron, pensions director at Aegon, said he assumed there would be a fixed date for the change – most likely 6 April 2028 which would create a “cliff edge” for access.

https://www.yourmoney.com/retirement/mi ... 7-in-2028/

Also,

"Experts said the move would probably affect those born after April 6, 1973, who are aged 47 and younger today. They will have to wait an extra two years to take either a lump sum or income from their pension. "

https://www.ft.com/content/26b91aac-8c7 ... ae371ab951

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338062

Postby moorfield » September 4th, 2020, 11:02 am

Darka wrote:
"Experts said the move would probably affect those born after April 6, 1973, who are aged 47 and younger today. They will have to wait an extra two years to take either a lump sum or income from their pension. "

https://www.ft.com/content/26b91aac-8c7 ... ae371ab951



Superb, thank you Darka. So it appears I am one of the lucky ones who will just miss this cliff edge.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338067

Postby AleisterCrowley » September 4th, 2020, 11:24 am

I've just turned 55, and would happily swap with someone turning 55 after 2028..... :(

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338092

Postby Adamski » September 4th, 2020, 12:56 pm

This has been on the cards for a while as we're all living longer. It makes total sense as the state pension gone from 65 to 67, so personal pensions shift by 2 years as well, 10 years earlier.

Let's remember it was George Osbourne that gave us the pension freedoms in 2015, increased the personal allowance and allowed personal pensions to be passed to loved ones either tax free or at marginal rates. Although he gets a bad press he did extremely good things for us here, completely anathema to labour.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338101

Postby SoBo65 » September 4th, 2020, 1:44 pm

Exactly why I withdrew my tax free cash on my 55th birthday, do not trust governments with pensions.....

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338107

Postby OLTB » September 4th, 2020, 2:19 pm

I also turn 55 in 2024 and was wondering whether to take my tax free cash or not.

I suppose if I simply replicate my SIPP investments within ISAs (as and when I can shovel it all across each tax year) there won’t be any disadvantage.

Cheers, OLTB.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338122

Postby Gostevie » September 4th, 2020, 3:36 pm

SoBo65 wrote:Exactly why I withdrew my tax free cash on my 55th birthday, do not trust governments with pensions.....


You and me both. :D

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338131

Postby Urbandreamer » September 4th, 2020, 4:12 pm

Adamski wrote:This has been on the cards for a while as we're all living longer. It makes total sense as the state pension gone from 65 to 67, so personal pensions shift by 2 years as well, 10 years earlier.

Let's remember it was George Osbourne that gave us the pension freedoms in 2015, increased the personal allowance and allowed personal pensions to be passed to loved ones either tax free or at marginal rates. Although he gets a bad press he did extremely good things for us here, completely anathema to labour.


Ignoring the whole Labour/Conservative thing, just who's money is it?

My wife intended to retire at 50. She had been paying HER money into a personal pension, planned to retire at 50. The pension provider had "lifestyled" her investments. Moving her out of equities and into fixed interest, which entails costs. Six months before she could get at the money SHE had paid in, the government decided, without needing to see the size of her pension pot, that she could not access HER money until five years later.

She didn't and doesn't have £1.25mill in her pension, but at that time it would have been possible for others. The LTA was reduced at a later date.

The ONLY reason I think valid for the government to dictate when a personal pension can be drawn is the possibility that it could run out before you die. Since 2015 the government has done very many things to limit how big your personal pension can be, So clearly that reason can't be anything to do with it. ESPECIALLY for high earners (I'm not one) who can contribute less per year.

A cynic I might consider that just possibly the government wants people to be required* to work until shortly before they die.

A quick calculation shows that if you can get 2%pa (which should be possible using the stockmarket) and save £40kpa it takes under 21 years to reach your LTA, but of course you can't retire under 58 so pensions are of no use for anyone attempting FIRE.

*I think that there is a term for people required to work, slave, serf, thrall or something like that.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338149

Postby TUK020 » September 4th, 2020, 5:56 pm

Gostevie wrote:
SoBo65 wrote:Exactly why I withdrew my tax free cash on my 55th birthday, do not trust governments with pensions.....


You and me both. :D

likewise

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338192

Postby Adamski » September 4th, 2020, 8:18 pm

@urbandreamer I can see where you are coming from but for very early retirees we've got Isa's to bridge the gap to whe pensions are available. I'm sure the boffins at the treasury think it may be on the generous side as it is. The good news is were living longer so retirement at 50, you could live another 40 years downside being it is a very long time to fund.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338195

Postby Snakey » September 4th, 2020, 8:26 pm

Looks like it's still all "assume" and "probably" when it comes to whether it will be tapered in vs cliff-edge.

I turn 55 in 2027, totally fancy leaving work asap (Plan A being June 2022) but my ISAs etc are light compared to my pension - the longer it is before I can get my hands on it, the bigger my first-world problem.

I wonder how far we are from seeing the draft legislation?

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338209

Postby Urbandreamer » September 4th, 2020, 9:14 pm

Adamski wrote:@urbandreamer I can see where you are coming from but for very early retirees we've got Isa's to bridge the gap to whe pensions are available. I'm sure the boffins at the treasury think it may be on the generous side as it is. The good news is were living longer so retirement at 50, you could live another 40 years downside being it is a very long time to fund.


Question?

Would that include the "Life time ISA", that you can't access until 60?

Look, my problem is not with you, but what you said. I seriously think that you didn't feel that you needed to put much thought into what you said. Why should you?

However if you put any thought into it you are at the edge of a rabbet hole. The government and Mp's who are either part of the government or part of the "house" have said many things.

You can't trust them, full stop.

In my time I have been in a state where I or others couldn't accessing "company" pension until the company allows us to. Even if they had early retirement options they could refuse.
If I or they had a personal pension at the time we could have accessed it at any time, but the company wouldn't have contributed. When accessing a private pension I would have been required to use 75% to buy an annuety.

Then came pension freedom! Great!
Then came pension restrictions, over 55, introduction and falling LTA, restrictions on contributions etc.

I'm not sure if I should ignore the mood music or not.

Historically pension contributions were "free from tax", achieved by rebating the tax paid. Pensions paid are of course taxable income. Suddenly this return of tax paid on contributions is a "cost". As a standard rate tax payer it is somewhat achedemic to me, however the point about it actually being a state decision to allow untaxed savings in a pension IS an important point.

It's NOT like a "standard" ISA. Some of us have worried about the state raiding ISA's. As you, and I in my way, have pointed out, possibly "boffins in the treasury", may think that it's not actually our money but theirs. Or at least they have a claim, just as they have a claim to our labour (at least that's what I suspect that they think).

I'm planning to retire at 60, but require, hope, to live that 40 years that you talk about. I also expect to pay no tax for five years, as I will draw upon an ISA and manipulate taxable income.

There is a book that suggests that we should all expect to work forever, called "The 100 year life".
https://smile.amazon.co.uk/100-Year-Lif ... 150&sr=8-1

I disagree with the concept inherent to the argument in the book, that you can't produce enough to retire for the rest of your life, at any point. The book assumes a fixed point and then argues that you need to keep working. I assume that the point could move, depending upon income from capital.

However in all of this we have to make assumptions upon the state that we live in. I suspect (know) that there are TLF's who don't entirely trust the UK government and have wealth that they can access if forced to flee the UK. You might want to think about why they might feel that way, even if you or I are willing to take our chances here.

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Re: Government confirms pension-freedom age hike to 57 in 2028

#338210

Postby Snakey » September 4th, 2020, 9:35 pm

Chasing down the links to the original Parliament Q&A, it was a question from a Labour MP. In other words, not a sign that the Government is about ready to do anything, publish anything or confirm anything (in spite of some of the ridiculous "this is a kick in the teeth for taxpayers struggling with Covid" etc media quotes from people who'd seemingly not heard anything about it until today).

I'm going back to sleep now. :mrgreen:


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