- 7th September 2020
- Posted by: Suzy Hill
- Category: Personal Tax, Business News
Private pension withdrawal age to be raised
The Treasury has confirmed that the minimum private pension age will increase from 55 to 57 in 2028, meaning that savers in late forties and those younger will now need to wait two years longer before accessing their pension
When George Osborne was Chancellor and ushered in the pension freedoms which meant private savers could access their savings pots before state pension retirement age, he indicated the minimum age limit for doing so would rise over time.
It was intended that the age restriction should be linked to be 10 years behind the state pension age, which is currently 65 but rising to 66 this October and to 67 between 2026 and 2028.
Despite this, there have been no provisions in legislation since for an increase to be implemented, leading some to believe the proposal had been dropped.
However, in a statement to Parliament John Glen, economic secretary to the Treasury, said: ‘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.’
Currently, savers can take some or all of the cash held in private pension pots at age 55, including taking 25% of their savings tax free.
The age will be raised to 57 from 2028, meaning those aged 46 and below face having to rethink their plans if they had intended to use pension savings to clear a mortgage or take early retirement.