In a poll carried out by UK pension providers, a staggering 74% of those currently in employment had no idea of when they would be able to access their own pension. While most of the UK has now come to terms with the idea of having to work beyond 65, there is much uncertainty surrounding exactly when retirement will be, when access to private pension pots will be granted, and when a state pension can be drawn.
Both the Tories and Labour before them have pushed the age back at which savers can access their private pensions. Previously pensions could be accessed upon turning 50 years old, and this was the case up until 2007 when the then Chancellor Gordon Brown increased the age by five years. He also made other radical and sweeping changes to the UK pensions system, which were actually widely lauded at the time.
However, any changes Brown made previously have completely paled into into insignificance against the reforms introduced by George Osborne in the April Budget 2014. With his promise of complete pension freedom in relation to how savers are able to access their funds, there is apparently much to be satisfied with.
Access Denied
However, it’s not all great news for those under 40 as they face not being granted any access to their savings until 57 from 2028, however it was perhaps glossed over that the government intends to seek consultation about the possibility of actually further increasing the age of access to apparently allow people more time to accumulate their pension wealth.
Since April, guidance has been offered stating that private pension access should be five years below the age granted for state pension access, instead of the current 10. With state pension access currently placed at the age of 68, this will mean that private pot access will be delayed until the age of 63.
The Government has expressed an intention to link pension age to the statistics currently relating to life expectancy, but the finer points are still to be worked out specifically. There is speculation in some quarters that the retirement age for those under 40 could be in the mid-seventies. The uncertainty and constantly moving goalposts has led to a massive distrust of savings and pensions as a whole with the younger generations. Why would anyone want to pay into a fund when the rules can quickly change to further delay access?
Despite the introduction of generous tax breaks on UK pensions, many young Britons will simply be seeing this as George Osborne giving with one hand, but taking with the other.
About John Cassidy
