An article in the Telegraph explored a pivotal issue facing the country’s pension culture right now and it raised some valid concerns that could impact the age at which you are able to access you pension pot. Prestige Tax and Trust Services writes about the findings.
Access Your Pension When You Hit 55
Whether people like it or not, most have accepted that their retirement age has risen due to a whole host of factors that have made working into your late sixties, or even your seventies, a reality for many.
However, this doesn’t mean that you have to wait until you retire to access your pension. Increasingly people are minimising the pressure of a 9-5 work schedule by accessing a portion of their savings before retirement.
Specifically, until 2007 it was possible to access your pension and start withdrawing money, as well as take out 25% of said money as a tax free lump sum, at age 50. However, that year then-Chancellor Gordon Brown raised the age to 55 as part of a wider pension reforms.
Now it seems with new changes introduced by current Chancellor George Osborne, this age limit may be set to rise once again. At what age will you actually be able to access your pension?
Access to Pension Funds: Blocked to 63 or Later
The article was aptly titled‘Aged 40? Access to pension money may be blocked until 63 – or later’, and it raised some relevant points.
Significantly, Osborne introduced welcome pension reform to provide total pension freedom from next year onwards once you’ve hit the 55 thresh hold. This was a move designed to encourage pension saving.
However it could have ramifications for younger pension savers. The article goes on to point out that it has been proposed that on the back of these reforms, the pension access age will climb to 57 by 2028 which will affect those who are currently aged 40.
There’s also the idea that officials are considering tweaking the age to contend with. The article points out that currently it is being suggested that the pension access age sits”five years below the State Pension age instead of ten years”. This would mean that those who are 40 right now would retire at 68, meaning that they would receive access to their pension pot at 63.
At Prestige Tax and Trust Services we believe that this article highlights the direction the UK’s pension policy may move in over the next few decades and we would advise that you take it into account when considering your pension plan.