My company have changed the retirement age 20 years after I started my pension

[QuebecBagnet]

So private pension which I started over20 years ago. On the understanding I’d be able to claim full pension at 55yo. Had a letter now saying they’ve changed it to 57yo as the government have now declared 57yo to be the new minimum retirement age.

can they do this? I thought I’d be getting it in 9 years time. Seems shit that the government can interfere as what’s it got to do with them? Maybe I wouldn’t have paid into it if I’d known 🤷🏻‍♀️ (Well I would but that’s not the point).

Though the letter also says independent advisors have told the company they need to contribute £626million to ensure everyone can be paid what they’re due.

so maybe I’m stuffed anyway and won’t get a penny.

I remember in the late 90s the company said the funds were so good they were stopping paying in the employer contributions for a few years!

You definitely need to check the paperwork. It really doesn't sound remotely feasible that a DB scheme allowed you to retire at 55 with no loss of benefit. Unless the defined benefit is 10% of your average salary for every five years of service! How much are you expecting as a proportion of your salary?

As others have said it massively depends on what type of pension you have. Defined benefit schemes will have a normal pension age (usually between 60 and 65) plus an age you can first take it, usually with a significant reduction to reflect early payment, which will probably have been protected as minimum ages increased.

However, I suspect you have a defined contribution scheme where the provider is bound by constraints on minimum ages set by the government, this is increasing to age 57 in 2028.

Minimum pension increases have been increasing over the years as the government tries to tackle the demographic issues of an aging population. There are certain tax benefits attached to pensions and the government is looking to make sure these are directed to supplement individuals retirement. Importantly though if someone doesn’t have any personal retirement provision they will be entitled to certain benefits on top of their state pension- in particular Pensions Credit. The government raises minimum pension age to stop people accessing their pension too early and therefore running out of money as life expectancy increases and needing to fall back on the state.

When you company you mean an actual private company right? Not a public sector scheme?

Yes private company

I’ve logged onto the pension scheme website and it says normal pension age is 60yo. So guess the minimum age going up to 57 isn’t an issue. So my day has got worse, now need to work an extra 5 years! 🙈

Sorry but the govt is always changing the benefits for pensions. I’m in the public sector and every few years the benefits are reduced. The one I’m hoping to at 67 looks like nothing I signed up to at the age of 21.

Oh, Quebec, some days are just 💩, aren't they? Sorry for such crappy news.

I wish I could edit my message. It sounds like you may have a defined benefit pension. I work in this area and generally taking Early Retirement is a poor idea, reductions are generally around 3% for every year you go early, so if you had a normal retirement age of 60 and retired at age 55 you would have a reduction of around 15%. Given the average 55 year old woman would be expected to live for another 30+ years that could be pretty expensive

commonslibrary.parliament.uk/research-briefings/cbp-7405/

I originally paid into a pension that would allow me to retire at 60. Due to government changes, I will now have to work until 67, as opposed to another three.
That's another ten years for me, and I have been diagnosed with a chronic pain and fatigue condition.
I'm just about surviving at the moment, but how long that will last, I don't know.
It's really rubbish, and not what I signed up for.

Your scheme may have a normal retirement age / yours sounds like it’s 60. There is also an early retirement age (which will mean less annual benefit). Pension freedoms earliest access age is 55 rising to 57 as per your notice.

it would be unusual for DB in the private sector to offer a final salary amount at 55/57. They will offer a reduced amount though or full amount at scheme normal retirement age.

methinks you may have understood. Best to chat with your scheme administrators.

I suggest you google women's pension scandal and have a read.

Some DB schemes like NHS increased the minimum pension age over the years. However, you could still access the benefits from the earlier scheme at the original retirement age and defer the benefits from other schemes. It may mean though that you cannot build up any more benefits if you want to keep working.

I suggest you google women's pension scandal and have a read.

This situation isn't anything to do with that though.

Most DB schemes also require a certain number of years in for full pension. Mine used to be a final salary scheme (it isn't any more), but to get the full amount of half final salary you had to have 40 years in. Anything below and your pension was reduced according. So your old colleagues who retired at 55 either started young or accepted a reduced pension. Check the rules of your scheme but if you only have 20 or 25 years' service you may not get full whack anyway.

Of course the government can do this.
They’re not interfering in an entirely private arrangement between you and your employer.
The state has given you over 20 years of extremely valuable tax relief on this pension arrangement.
When the tax relief was increased, did you think that shouldn’t be applied to your pension, the state should stay out of it?

When you started the pension, if you had read everything, I’m sure it would have told you that it was subject to changes in legislation. So in that sense, you’ve known since day 1 that it could change.

The increase in NMPA was announced (if not enacted) in 2014. So you’ve had one third of the length of your service as notice!

The state isn’t stopping you from retiring at 55. They’re just saying that the excellent tax relief vehicle of a company pension won’t be funding it. You may think it’s not the state’s money - but a lot of it, from tax relief, is. From a policy point of view - we have a falling workforce and the government of the time wanted to encourage people to stay in the workforce longer. You can reduce your company pension payments and save that to retire on 2 years early if you like. But you don’t like, because: tax relief.

I’m surprised your company pension was ever offering full benefit from age 55 though, with no actuarial reduction. Not impossible, but unusual. And as you've now seen the scheme retirement age is 60, I think you probably just misunderstood it.

Just searched and saw your other question on your pension from August. Looks like you don’t understand your scheme - you might want to post again, I’m sure we can help you get a handle on it.

@Testina Considering the policy aspect, if the government wanted people to be economically active and invest some of their income in their pension, they would stop changing the pension age so they could make informed decisions.At the beginning of my working life, both my state pension and employer final salary pension were age 60 with early access from 50 for the employer scheme. I’ve now been working and paying NI for over 42 years. I made the decision not to have a career break after DC so I would have full contributions by 60 - I now have to wait an extra 7 years.I would advise people to enjoy a career break as you will easily build up a state pension by 67, or 68 as now being floated. A number of countries allow people early access to their state pension when they have worked 40/42 years, this reflects that many who start work in their teens may have done hard physical work or people wouldn’t have enjoyed gap years, career breaks or long university holidays etc. - they have just been economically active the whole time. I think there is a strong case to do that here if people wish to stop work or cut down after a lifetime of contributing both labour and taxes.

I don’t disagree with any of that @LadyLapsang

But my point is that @QuebecBagnet said, “what’s it got to do with them?” re the government and her company pension - and I think it’s got a lot to do with them, given that it’s state legislation that creates the tax benefits of her company pension.

Similar is happening me. Started paying into a pension which was to pay out max benefits after a certain number of years. Then after over a decade they decided to add 5 yrs on! And the benefits are less.

I was surprised this is legal, but it is. And annoyed (under statement)!!!!!

It’s unrealistic to expect zero changes over potentially 40 years of a scheme’s life though. Although every sympathy that it’s gutting!

What has happened to your previous contributions?

I started off in a FS scheme which change to CARE. My 10 years contributions in FS are locked as FS but based on the salary at that point, then uprated annually by CPI. So although far less valuable, I am still getting what I signed up for to that point - because no future pay rise was ever guaranteed.

I’ve had 3 more changes since - including now paying 9% for the same benefit for which I previously needed to contribute 7%. But, I’m still getting what was promised for that 7% - they don’t say, “ah, we know you paid 7% for 4 years, but we’re only giving you 3.”

Whats happened with yours?

@Testina
are you sure your final salary was fixed at the time you moved to CARE? That would be unusual.

Different schemes use different FS criteria, I.e. best of last 3years, best average of 3 consecutive years in last 10 years. That usually applies for as long as you are in active service and do not have a break of more than 5 years.

My FS pension moved to CARE on the same basis as @Testina

As did mine (USS)