Pension freedom age will rise from 55 to 57
Keep saving: pension age is changing
Those who are now in their 40s will have to wait an extra two years before they can access their private pension.
The government has confirmed the age threshold will increase from 55 to 57 in 2028.
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.
The government first indicated its intention to increase the threshold back in 2014 and in an answer to a parliamentary question on 3 September said it will legislate for the pension freedom age hike “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.”
Nigel Hatt, pensions specialist at Tilney, said: “The intention to increase the minimum retirement age from 55 to 57 in 2028 was announced by George Osborne in 2014 to tie in with the increase in State Pension Age to 67 from that year.
“It was not however enshrined into legislation. The motive is to recognise increasing longevity and thus to encourage people to remain in work for longer. It thus gives another two years to continue funding private pensions and in so doing pension pots will hopefully be able to provide an adequate level of income to support retirees for the remainder of their lives.
“People currently aged 47 or under will be affected by the change. Those who had planned to access pensions at 55, but can’t do for a further 2-year period now, might want to consider funding ISAs to use as a bridging function to cover this period.
“One point in favour of the Government is that it is giving plenty of advance warning this time unlike with the increase in State Pension Age for women from 60 to 65 which understandably has caused some animosity.”
State pensions dispute
Plans to increase the state pension age for women born in the 1950s were first announced in the Pension Act 1995 but these changes were accelerated as part of the Pension Act 2011.
The Backto60 campaign group, along with The Women Against State Pension Inequality, have claimed the changes were implemented unfairly and are calling for compensation to be paid to 3.8m women born in the 1950s.
They argue that the changes were made so quickly that these women were left with no time to make alternative plans.
Backto60 challenged government but the High Court ruled on October 3 that the increase in the state pension age was not discriminatory, as the women had claimed.
The group is currently waiting for the outcome of its Court of Appeal case.