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.

I think people being economically inactive isn’t great for the economy overall. I meet lots of people who are retired / working part time fulfilling jobs due to generous pension schemes/ drawdowns/ sold a business. Yes people are still paying tax but at a lower rate generally. One of the issues with pensions is you often get a higher rate tax relief when you pay in but pay tax at a lower rate later on. That and lack of NI contributions. Obviously good for individuals but doesn’t help country balance the books.

@MidnightBlossom there's a great deal in what you say- we have a lovely guy working for our parent company who is 70 - pretty senior- he likes the job, enjoys the routine, comes in every day - but it's a pretty flexible 20 person company in an interesting business and they aren't obsessed by systems/ ticking boxes or age and have a big mix

Contrast with a very big player in our industry who can't keep staff and yet it's a trendy 'in demand' company to work for- they get rid of you usually post 50 unless you are at the very top, regardless of how good you are and especially if you are on over £50k a year, bring in a bunch of grads on £28k who can 'kind of' keep the show on the road but have no deep experience and don't question anything- it's all about box ticking, not questioning anything, and image and the young people move on all the time often for an extra £2 or £3k or to go travelling or back to Uni for Masters/PHDs etc - to be frank a lot of them don't like work or routine.

I suspect a lot of over 55s leave because their company's have become bleeding annoying or they do a job that is physically becoming hard or they have inherited and decide they would rather have the time and do bits of things as and when they want.

Most people I know (including me) who have taken their 25% lump sum and/or getting their pension are still working but using the pension as income to enable them to step back and take less full on and lower paid roles. So still paying tax and contributing but taking a slow fade towards retirement

Have you maybe written this badly. As it appears to say you plan to retire at 55 and draw down one pension but feel you shouldn’t be allowed to ?

I don’t think by increasing the state pension age the Gvt actually expect people to continue in f/t work until they are 68, they are encouraging and supporting savings into pensions so that people can retire earlier on their own resources.

@CocoDC this is a very important point too- if we have got rid of non contributory pensions in most cases then the money being drawn is more like a long term isa - it's that persons investments - I can see it's different if it's non contributory but it rarely is these days- and it's not really on to not let people access money they have actually contributed- I can see it isn't great for the economy and personally I would move it to 59 - there will always be people though who pack in work as they draw down on a house or have inherited however much we change the goalposts.

OP, you want to travel and so need to fund that. You might consider giving up your days to work a reasonable price to pay for traveling.

I'd rather not travel or have expensive new things as it allows me not to work but to enjoy every moment of every day doing as I please.

The absolute joy of waking up on a Monday morning and NOT going to work is reward enough for me.

If I had to go to work now I would be disinterested, unambitious and probably a very bad employee.

It's nice to have the choice.

@Crikeyalmighty i feel for him as you can see it's really knocked his confidence although he's trying to be pragmatic about it. as he said, when he's in an interview he can't make himself look 20 years younger!

he wants to keep working and has no plans to retire early. he likes his job - more broadly, just not the firm he's at currently. he's good at what he does, he's a former colleague of mine so i can confirm he's nice to work with!

i think he will find something eventually, but it's been an eye opener. if the govt are serious about wanting people in their 50s to keep working and not retire early, then they need to look at what's causing them to do this.

there will be a cohort who can afford to go early as a lifestyle choice because they have good savings and investments and want to travel and so on. but there are going to be others who are going because they have to and don't have £££ saved up - for health reasons because their bodies can't cope with the lifting or the typing, or family reasons because they are caring for elderly parents, or because prospective employers don't want to consider them because they are considered too old.

I used to work in environmental services for the council and the average loader on the bin lorries were stuffed physically by that point too. Few exceptions to the rule there’s a chap who’s in his 70s who is probably fittest one in the yard.

It’s all very well saying people can go on for ages when they finish work but statistically the average male manual worker is dead by 71. Four years doesn’t seem like a terribly long retirement. Perhaps if anyone should retire early it should be manual workers.

Precisely.

To be able to retire at 55/57 on private pension you need to have a substantial pot so most likely paid massive amount of tax in your working years.

Increase this age and people will start saving into other vehicles instead.

I am doing it because I am lucky to have been able to afford to max out on my pension with very generous employer contributions, but do question whether this is sensible for the economy and also in terms of our aging population being more active. I do think some people slow right down when they retire (as you'd expect when physically you slow down but at 55 most are still fit and well and this would mean they are out of the workplace for 30/40 years.

I can see there's lots of flaws to my argument and of course highly hypocritical as I'm planning on doing it, but just because I can, doesn't mean I should be able to!

they were preventing NI increases. As people live longer the state pension takes a lot more funding overall , so either we increase national insurance and pay more into it, or people claim it later, thus reducing the cost.

But if you’re poor health then it can be ideal. A family friend died at 64 so by your theory, he’d never have retired yet he could afford to so I’m glad he did.

my dad retired at 55 then went on to start his own company until he was 67. Many others volunteer etc.

I’m assuming I’ll retire at about 80 though. 😭

That’s the oddest thing I’ve read, it reads like I intend to do it but don’t want anyone else to.

I intend to retire at 50. My husband is older than me and I want to enjoy our retirement together.

This is only really possible if I can claim my pension at 55. We aren’t wealthy.

Ok.
I'll bite.
I've just 55 and I've taken my final salary NHS pension.
I'm still working 3 days a week - this plus my pension means I'm better off financially- I have a better work-life balance.
I have money in the savings account - a new car on the drive and house improvements under way.
I'm still contributing to a different NHS pension which I can get when I'm 60.

Its a no-brainer- why wouldn't I?

I have no plan to work full time past 60. My job is stressful & older people sat in senior roles forever is a barrier to change & the advancement of younger staff. I will reduce, do some contracting, hopefully will have some grandkids to help with.

I dislike the government tinkering with the age i can access pension, so am keeping a pot of money separate so if i wish i can choose to fund myself to reduce hours.

I think there needs to be a concept of a different but still valuable role older people can play if they no longer want a full time/stressful/senior role. Volunteering, part time & flexible work that draws on experience, mixing some paid work with some reliance on savings.

Many civil servants can retire at 55 with nice DB pensions, let's not penalise those with private pensions who are able to do the same. Thank you.

If you’ve saved hard and can afford it (and likely made huge sacrifices to pay off your mortgage early, put extra away into your pension etc) it’s no one else’s business how many years you choose to work.

I think YABU because 1. Some people have poor health in their 50s and need to retire. Or they have physical jobs they are just no long up to and 2. People don’t save into private pensions if they don’t believe they’ll be able to access them in a reasonable time frame. Obviously occupational pension schemes are different and many are now tied to state pension age.

I think it's fair to say my argument is flawed and I stand corrected!

On average, the age up to which people experience good health and disability-free living is under 63 years, for both men and women in England.

I think that gives some pause for thought on the merits of opting for retirement sooner rather than later...

Good paying jobs need to be available to young workers. The idea that losing near retirees from the workforce is going to cause economic problems sounds a stretch to me.

I'll be trying to hang on to my job for a good while longer, but when it's time to give it up, I will at least be happy knowing that it frees up a spot for someone else to do it.

This thread is specifically about retirees, so I only referred to them

But yes, I agree that anyone who works / works more hours will likely pay more tax and spend more than people who don't work

My parents retired at 55 - no generational wealth, just good career choices, and a lifetime of being fiscally responsible. They then had a lovely 10-15 years of travelling the world. I on the other hand am likely to be working until I'm 67. Neither is right or wrong... They were able to, why shouldn't they? I'm not able to, which is sad for me, but it's not something other people should have a say in either way!