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Increase from 55 to 57 described as ‘kick in the teeth’ during COVID-19 crisis

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Pensioner on phone. 20 July 2020. (AFP)

The government announcement that the minimum age for drawing a personal pension in the UK is to rise to 57 in 2028 is viewed as a ‘kick in the teeth’ during the ongoing coronavirus crisis.

Those who pay into a personal pension plan, either directly or arranged through their workplace, can currently access their money at 55, but in 2014 the government announced plans to raise the age due to increased life expectancy.

The change has yet to be brought into law, however, the Treasury minister, John Glen, has confirmed that there are still plans for legislation.

“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,” he said in answer to a parliamentary question.

“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.”

The Change, first announced by George Osborne, who was the chancellor at the time, will affect workers currently aged 47 and under.

Mr Osbourne was also responsible for bringing in rules which removed the limit on cash withdrawals, as well as the requirement to buy an annuity contract to provide an income, allowing retirees more access to their pensions.

Moira O’Neill, the head of personal finance at the investment firm Interactive Investor, said the increase flew in the face of other changes that offered savers more pension freedoms.

“This feels like an extra kick in the teeth at a time when many people are reassessing their work/life balance after a terrible year socially, emotionally and economically,” she said.

“Not so long ago, the private pension age was 50. Most of us have long accepted that we are probably going to have to work for longer than we might have liked, but it’s always good to have the option of retiring sooner.”

Nigel Hatt, a pensions specialist at the financial planning group Tilney, said the extra two years gave people time to put more into their funds. “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,” he said.

“Those who had planned to access pensions at 55 but can’t do for a further two-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.”

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