State pension age increase and impact on private pensions.

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Talk in the papers today of moving state retirement age to 68 from 67 early. This will affect people between 49 and 55. So a heads up if this impacts your retirement plans.
https://www.independent.co.uk/news/uk/home-news/state-pension-age-increase-68-2037-labour-treasury-b3015125.html

The one thing that doesn't get talked about is the knock-on impact on taking private pension and the 25% tax free lump sum. They are usually tied to 10 years before state retirement.

I'd be more supportive of the state pension age rising if the private pension and and lump sums were able to be taken as they are today so those who save can stick to current plans. i.e. tie them to 55 rather than 10 years before state pension age.

It’s a good point and didn’t think of this. They certainly shouldn’t move the age you can take your private pensions though it should have always been kept at 55

Yes, not worried about state pension but I’m going to be pissed off if the age I can access my private pension changes - I’m 50 and have been planning on 57

Fucks sake

Is only one year! Since when did people plan their finances so many years ahead to one specific year 😂

Another ridiculous move by the government.

The majority of employers are not interested in giving jobs to people in their 60s and those who have jobs are often targeted for redundancies or pushed out.

So all that raising the pension age beyond 65 really achieves is moving people from state pension to regular benefits. Pointless.

I do not understand this at all.

Retiring at 67 is a push as it is. Maybe for people who have office jobs, but what about heavy manual labour jobs e.g. plumbers, gardeners, nurses. There are already a generation of youngsters suffering because there are older people who should have had the option to retire and do not want to continue working.

I also see a far higher benefits bill because the people number of people who will be eligible to able claim disability benefits will rise and out of work benefits because finding a job after 55 is increasing difficult.

Will this also mean that you will not be able to access your private pension until 58. There is already an extra 2 years being added. This is is just getting beyond ridiculous.

Well it's now two years (after it was raised from 65). Also there have been rumours of scrapping the 25% tax free withdrawal.
So every year that that is unavailable to me increases the risk that I won't be able to get the tax free withdrawal at all.

Messing with pension rules has serious long term planning implications.

I read this and am impacted but it wouldn't make a difference to my plans.

One thing I thought about was that I believe if you are awarded PIP before SPA, you are awarded it for life so the older SPA becomes, the more people we have in this category!

I have increased my contributions into my ISA to the full amount allowed rather than topping up my pension - I will draw that first .

It's not "so many years". The group affected by this are 49-55. Say you are 55 and were planning to retire at 57- you now have only two year's notice of the change and need to find a whole year's income from somewhere outside your pension.

Most people will be thinking about retirement at least 5 years ahead, in terms of repositioning investments and possibly handover.

I've just realised another issue about this. People will be in the inheritance tax trap for longer.

This trap is where those with a decent DC pension pot, savings and equity in their home (combined value of £500k per individual) would have the estate liable to inheritance tax.

Obviously this trap is mostly for people who have assets but die in the years immediately before and after retirement, when their assets are highest. I.e. before the DC pension pot is spent during retirement or house is downsized.
This is part of my frustration about the lump sum moving into the future - I want the money out and either spent on fun, or given to kids to help them get a start on life!

OP, the trap you speak about is a very real one, and the rule of unintended consequences will hit the government further down the line. Rather than being careful with DC pensions to ensure that they last for the full retirement period, some people will be encouraged to spend, spend, spend and/or pass on lump sums to children fairly early on. Then, once the money has run out, they will fall back onto state support.

DH and I are in our 60s and still working. Our position is better than that of younger people, as we do have several pretty decent defined benefit pensions between us. However, we also have DC pensions which, together with our house in the South East, means we shall fall into the IHT trap. Younger people are more likely to have only DC pensions, and will therefore be hit harder.

All our children are in their 20s, and DH and I are looking into how we might be able to protect their interests whilst we are still alive.

57 is far too young to retire.
The old age pension was never intended to support people for 25 + years.

On a point of information if you retire for medical reasons (eg have a stroke or heart attack and are no longer able to work) you can access your private pension earlier than the age given.

as the state pension age goes up more and more people will be retiring earlier than that for medical reasons and will be entitled to PIP/ESA and private pension.

(this is my situation).

I beleive the government did do some modelling prior to raising the state pension age and this was an expected outcome.

But if you retire at 57 you are not using the state pension. You are accessing your private pension that you have saved towards.

And retiring at 57 does not mean you will never work again. You could look for a part time role, or care for elderly relatives or take up voluntary/work.

Exactly! I’m beyond 57 now but not at state pension age. If I could afford to retire now I would volunteer at the British Museum to help decipher all those thousands of ancient Assyrian cuneiform clay tablets they have waiting in storage (I’m sure they will be thrilled! ).

I just feel hit from every direction at the moment, trying to future proof your finances & plan for the future when the goal posts are constantly moving is a nightmare.
Luckily my small DB pension will stay at 55 & I don't include the state pension in my calculations as most of my income doesn't come from conventional retirement pathways & i have no intention of working anywhere close to that age

In that article HM Treasury has said it's untrue so no need to panic yet!

It is worth checking the paperwork for your private pension, as some schemes have a protected pension age of 55 - meaning that you can still access it at 55, despite what has happened to the state pension age.

Ive said this for ages! I’m fully planning on only relying on my private pension and other savings. I appreciate state pension needs to rise as it’s unsustainable (whole separate issue) but it feels really unfair that my own savings are restricted in such a way.

I’ve actually reduced how much is paid into my workplace pension (still paying in some) to pay more into a Stocks & Shares ISA so that I can take that when I want!

It’s not only one more year. When I started paying in for my pension my retirement age was to be 60. I’ve paid all of my contributions I’m mid 50s.

I have no other pension and no income as I can no longer work due to my health so my DP supports me (begrudgingly). I’m basically holding on until my state pension when I finally have my own money again.

Surely it is rising because of the increase in life expectancy. I don’t think anyone can base their retirement planning around a state pension that may or may not be there . I’ve always taken the view I’ll provide for myself and any state pension is a bonus .

Yes but this means it’s likely the age at which you can access your private pensions and the 25% lump sum increases. That’s currently only 7 years away for me so raising it by a year is a big change as I’ve planned around that. It’s fucking outrageous

This drives me nuts!
I did an admin job, just taken early retirement at nearly-66.
Many people assume that you can’t do a physical job at 67, but you can a non physical job, but dear god trust me, your brain atrophies too! I had been doing my job for almost 20 years and bits I could do in my sleep but as is always the way, new bits are introduced and it took me double the time to absorb it.
Never heard of meno brain? It’s real and it doesn’t get better.

It may only be ‘one year’ but it is one year on top of another two years added.

whilst I kind of get the comments on it’s ok if your are in an office job, I don’t feel that I’ve got another year in me in my office job. Part of my retirement plan is to finally get some time to get fit after years of sedentary, stressful work that with childcare and elder care has really impacted me and limited what I can do. The thought of another year actually fills me with despair. I think the suitability of a job into late 60s depends on other factors as well as manual vs office like how many hours per week, how long a shift, whether it involves unsocial hours, and how far away from home it is.