Rise in pensions freedoms access age needs ‘plenty of advance warning’
7 September 2017
Proposals to raise the minimum age for accessing pension freedoms need to be given with plenty of advance warning to avoid huge disruption to the plans of thousands of pension savers, says Aegon.
The government previously indicated that it would increase the age at which pension freedoms apply in line with any rises in the state pension age, and with the latter set to increase to 68 earlier than previously expected, consumers need to be aware of the knock-on effect this could have on their future retirement plans.
Steven Cameron, pensions director at Aegon, says: “The first increase to age 57 is anticipated in 2028 when state pension age increases to 67, however this has yet to be built into legislation. Recent confirmation that the state pension age will increase further to 68 earlier than previously expected could have knock-on consequences for those hoping to make early use of the freedoms and savers need to be clear on this.
“With ongoing controversy over poor communication of increases to the state pension age for women, it’s important the Government gives as much advance warning as possible of any changes in the minimum age for accessing pension freedoms. This needs to be communicated widely to avoid people wrongly assuming that the age 55 is ‘hardwired’ into the pension system.”
Since their introduction in 2015, the pension freedoms have proved popular, with an increasing number of people opting to access their defined contribution pots from as early as 55, the current minimum age.
The Government has committed to providing consumers with at least 10 years’ notice of any further increases in state pension age and Aegon says the same rule should apply to any increase in the age for accessing private pensions.
Cameron says: “To date, the Government has not indicated any change to the minimum access age when state pension age begins to increase to 66 starting next year. Changing the rules at such short notice would be hugely disruptive to the plans of thousands of individuals and would be highly unpopular.”
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