Savers waiting to hear when they can access their private pensions in future are being left in limbo by the government.
Savers waiting to hear when they can access their private pensions in future will have to wait longer still, as the government has refused to confirm whether the age at which people start taking their private pension will continue to rise in line with the next state pension age increase.
The coalition government originally committed in 2015 to a 10-year age gap between when people can access their private pensions – known as pension freedoms age – and when they can start getting the state pension.
It promised to meet this commitment in 2028, by which point the state pension age is due to have risen to 67.
Currently, savers can access private pensions from age 55, as the state pension age is 65.
But the current Conservative government is yet to confirm what will happen to private pension access in the interim when the state pension age rises from 65 to 66 by 2020 – just over two years from now. From December 2018 the state pension age will start to increase to reach 66 by October 2020.
A government spokesperson would only tell Money Observer’s sister website Moneywise that it keeps all aspects of the tax system under review through the annual Budget process, and that any changes will be announced in the Budget.
Industry calls on government to clarify its position
However, this lack of clarification means it’s difficult for those approaching retirement to plan for the future. Pensions provider Aegon has called on the government to clarify its position.
'The government previously indicated it would increase the minimum age for accessing private pensions in line with increases in state pension age, with the first increase to age 57 anticipated in 2028 when state pension age increases to 67. However, this has yet to be built into legislation,' says Steven Cameron, pensions director at Aegon.
Cameron adds: ‘To date, the Treasury has also not indicated any change to the minimum access age when state pension age begins to increase to 66. Changing the rules at such short notice would be hugely disruptive to the plans of thousands of individuals and would be highly unpopular.
Last month the government announced the state pension age will rise to 68 between 2037 and 2039 – seven years earlier than planned.
The government says the changes are necessary given rising life expectancy. The latest projections from the Office for National Statistics (ONS) show that the number of people over state pension age in the UK is expected to grow by a third between 2017 and 2042, from 12.4 million to 16.9 million.
‘In addition, recent confirmation that the state pension age will increase further to 68 earlier than previously expected could have knock-on consequences for those hoping to make early use of the freedoms, and savers need to be clear on this,’ adds Cameron.
‘The government has committed to giving people at least 10 years’ notice of any further increases in state pension age. This principle should also apply to communicating any increase in the earliest age for accessing private pensions.’
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