To think you shouldn't be able to access your pension at 55 (soon to be 57)

[movemamamove]

We keep hearing about the ever-increasing number of adults who are not in work or actively looking and the impact this has on the economy, and pension age has been increased to 66 and will be 67, so why is it that people can draw down on their pension at 55 rising to 57 in 2028? Surely this encourages people to retire earlier and step out of the workplace far earlier than they should be & it's probably only the wealthiest anyway which doesn't seem fair.

DH & I have been focusing on 55 as the first stage in our retirement. We planned to take a step back from our careers, draw down on one of our pensions to travl & hopefully live abroad for a few years. If/when we do re-enter the workplace here, it would be part time & likely far less senior roles so earning less & spending less. If I couldn't access this money until 60 or even pensionable age, we'd just carry on working until then as the only way we can fund our intended travels is drawing down from a pension fund - we invested heavily into very good workplace pensions so have minimal savings but excellent pensions.

Anyone else have a view on this or maybe an explanation why this early draw-down option hasn't been increased bar this latest 2 year extension? Or perhaps explain the reason why this is a good idea?
AIBU to think it should be extended?
YABU - leave well alone. If you can afford to take a step back & access your own money, why not?
YANBU -agree and it should be increased to 60+ to stop people retiring so early.

The workforce doesn’t really work like that, there’s no shortage of people who can step in to the roles that older people leave behind, whatever their age when they do it, and those people will be earning the senior salaries and contributing to the economy fully instead, as well as freeing up less senior roles for younger people. Whether it’s “fair” or not to retire early because only well-off people with good private pensions can do it isn’t really relevant, life isn’t fair and most people can’t afford to have exactly the lifestyle they really want to.

I don't understand... You think people shouldn't be able to access their pensions in the way you yourselves are planning on doing?

I think people should be able to plan for the retirement they want, just like you are doing.

People stepping down or back leaves more room for new people to move upwards. If you are at the top of the pyramid and can access your pension and support yourselves that allows movement up the pyramid and those at lower levels to move up and pay more tax / move off of partial state support and those at the very bottom to gain employment and move off being fully funded by the state.

You're implying retiring at 55/57 and living off your pension is a net cost to the tax payer - and I'm failing to see how it could be. You're not claiming benefits, and your job has been filled by someone else.

The people that can afford to retire at 55 aren’t taking out of the system, not at that stage at least.They aren’t claiming UC. They typically aren’t needing support with housing or transport. They aren’t paying high income tax anymore but they have opened that role to someone else, who will be paying higher income levels so that tax will be still paid.

I am not sure this is accessible for all, my DH has a pension like this on which he can take 25% at 55, but it's a really old pension. Mine does not have that option.

I am one of these people, I am still paying plenty of tax.

Although the contributions to and growth of the pension pot are tax free or tax advantaged, the income from it is taxed at your nominal rate so I fail to see how taking early or a phased approach to retirement is in any way a burden on other tax payers/the state. You might drop a tax bracket once you fully retire but the chances are if you have children you will be delivering financial or other material support to them and their children. I don’t see the problem?

If you think it is a bad system, then don't chose to be part of the system. Stay in work much longer.

I've been a prison officer for 30 years and in 18 months time at 55 I'm taking my pension and my lump sum. I've earned it, I'm taking it and getting out of a very dangerous volatile environment. I can't draw my state pension until 67 so I won't be a burden on tax payers lol. I've done my bit for society. Life's too short 😊

Surely there is an element of personal choice about this?
My private pensions are my money and I feel free to claim them early if I want.
People who retire early will have almost certainly worked their entire lives and paid into the state coffers continuously. If they want to retire early and can afford to why not?

I'm similar to you but a primary school teacher. So I work with much more volatile people than you.

I was lucky enough to take early retirement from my job, with an immediate pension from which I could also draw a lump sum.
I wouldn't be so ungracious as to want to pull up the ladder behind me.
Everyone's wants are different but if something similar is open to you, you want it and you can afford it then go for it. No need for a guilt trip of any kind.
I haven't regretted my decision for a single second.

I have worked for 44 years, so yes, retired at 60 on my private pension. Continuing to work was of no further benefit to me.
Loving the option I have taken

I took one of my former company pensions at 55 during lockdown as I wasn’t working due to redundancy.

When I read the T&Cs this pension is only payable for 30 years so I’d rather take it at 55 and hopefully get full 30 years than take it at 65/67 and there be far less chance of getting the full benefit.

Im still working and paying tax plus have a couple of other company pensions I won’t take until I actually retire.

Well, the ability to do that saved us. I don't know what we would have done otherwise.

My partner was made redundant from his senior role at 53. He tried absolutely everything to get a job at a similar level. Due to us being in financial difficulties he had to take a job any job after a year. It was horrendous for him. It was right at the bottom of his industry, minimum wage, working with people half his age.

He took his pension and we started our own business, moved 250 miles away and basically began a new life. The business will be our pension when we retire as we will pay someone to run it.

This isn't true, there absolutely is a shortage in many areas - health and social care being the obvious one. Many roles go unfilled because employers can't recruit. Birth rates are declining and the number of young people out of the workforce is high.

Hence massive numbers recruited from overseas.

My view is that this low pension age is only going to apply to small numbers so probably won't have much of an effect at all. But in principle it feels like yet another way the younger generations are propping up the older ones.

remember that tax starts to come out of those pensions once they are taken. Its not free money.

Only true up to a point. Friends of mine on the brink of retirement, indifferent walks of life have told me they will either not be replaced or replaced by a junior on a fraction of their salary, meaning way less tax in the government coffers to pay for, among other things, the increasing medical needs of our aging population.

buit, as i said, that pension is taxed when you receive it.

There are shortages in areas like healthcare because there aren’t sufficient degree spaces to provide the graduates, largely because there aren’t sufficient training places available and there isn’t enough investment. Think of how competitive medicine is as a degree option - there’s no shortage of young people desperate to become doctors. The NHS doesn’t operate within the same market forces as other industries because everything about it, right down to who it can train and employ, is ultimately driven by government policy rather than market forces. The problem isn’t being caused because some people at the top of the chain decide to retire at 57.

You should be able to take it whenever you want if you can afford it, it’s your money!

Quite a few big companies offer deals specifically targeted at older and more expensive employees to get them to retire early. As a mid-50s person with friends of the same age, I know more than a handful of similar aged people who have been offered packages to make them bugger off and start claiming their pension, instead of a salary. I wish I were one of them!!!!

@Autumnweddingguest that's my experience too -

People do it because they want to travel while they are fit enough and have the energy to do so . After sixty a lot of health problems seem to creep in and getting Insurance can be tricky as it can be very expensive.