UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

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nirajn123
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Joined: Sun Aug 02, 2020 9:09 am

UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by nirajn123 »

News in the FT today about the UK SIPP pension freedom age raised to 57 from 2028, rationale being few reckless spenders have no plan and spend too much too soon. As someone who was planning to retire early with an eye on drawing down just after 2028 means going back to drawing board and possibly working for 1-2 years more. :annoyed
000
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Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by 000 »

nirajn123 wrote: Fri Sep 04, 2020 10:56 am UK SIPP pension freedom age raised to 57 from 2028
One of the most Orwellian things I have heard in a long time.
TedSwippet
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Location: UK

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by TedSwippet »

nirajn123 wrote: Fri Sep 04, 2020 10:56 am News in the FT today about the UK SIPP pension freedom age raised to 57 from 2028, rationale being few reckless spenders have no plan and spend too much too soon. As someone who was planning to retire early with an eye on drawing down just after 2028 means going back to drawing board and possibly working for 1-2 years more.
I am already past age 57, so clearly it doesn't affect me at all, but I feel your pain. Its previous increase was from age 50 to age 55 in April 2010. On that date, I was four months shy of age 50.

The government indicated(*) that it was going to do this back in 2014, so there has been some time to prepare already. The news hit the press at the time, but of course had long since dropped out of mainstream view. Until now. Not a state secret, though; just out of the spotlight (for six years).

You probably still have a few options, at least one of which could be to simply borrow against the pension for the two years from age 55 to 57. Perhaps using a mortgage or other efficient method of borrowing. Or you might consider non-pension saving, at least for any part of income that doesn't qualify for an employer match, salary sacrifice uplift, or similar. Beyond ISAs, VCTs seem to be a popular route for people for whom pension saving doesn't work, though I've no direct personal experience of those, so that's not in any way a recommendation.

But yes, it's definitely annoying. The government seems to move one pension goalpost or another just about every single year, turning "long term pension planning" into an oxymoron.


(*) The link here is to the government's "response to consultation", and it appears to have taken note here of at least some of the responses received. That's in contrast to its more modern definition of "consultation", which is is to ask affected parties what they think of proposals, and then go ahead and implement them anyway and regardless of the responses.
Topic Author
nirajn123
Posts: 32
Joined: Sun Aug 02, 2020 9:09 am

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by nirajn123 »

000 wrote: Fri Sep 04, 2020 11:19 am
nirajn123 wrote: Fri Sep 04, 2020 10:56 am UK SIPP pension freedom age raised to 57 from 2028
One of the most Orwellian things I have heard in a long time.
Government's words not mine but couldn't agree more :)
Topic Author
nirajn123
Posts: 32
Joined: Sun Aug 02, 2020 9:09 am

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by nirajn123 »

TedSwippet wrote: Fri Sep 04, 2020 12:25 pm
nirajn123 wrote: Fri Sep 04, 2020 10:56 am News in the FT today about the UK SIPP pension freedom age raised to 57 from 2028, rationale being few reckless spenders have no plan and spend too much too soon. As someone who was planning to retire early with an eye on drawing down just after 2028 means going back to drawing board and possibly working for 1-2 years more.
I am already past age 57, so clearly it doesn't affect me at all, but I feel your pain. Its previous increase was from age 50 to age 55 in April 2010. On that date, I was four months shy of age 50.

The government indicated(*) that it was going to do this back in 2014, so there has been some time to prepare already. The news hit the press at the time, but of course had long since dropped out of mainstream view. Until now. Not a state secret, though; just out of the spotlight (for six years).

You probably still have a few options, at least one of which could be to simply borrow against the pension for the two years from age 55 to 57. Perhaps using a mortgage or other efficient method of borrowing. Or you might consider non-pension saving, at least for any part of income that doesn't qualify for an employer match, salary sacrifice uplift, or similar. Beyond ISAs, VCTs seem to be a popular route for people for whom pension saving doesn't work, though I've no direct personal experience of those, so that's not in any way a recommendation.

But yes, it's definitely annoying. The government seems to move one pension goalpost or another just about every single year, turning "long term pension planning" into an oxymoron.


(*) The link here is to the government's "response to consultation", and it appears to have taken note here of at least some of the responses received. That's in contrast to its more modern definition of "consultation", which is is to ask affected parties what they think of proposals, and then go ahead and implement them anyway and regardless of the responses.
Yes I read that 2014 proposal after this news. I wasn't too serious about SIPP until late hence the oversight. Pension is the most tax efficient option in my personal circumstances so will need to continue to contribute. I will work on the numbers a bit - it may not be as bad my initial reaction to this news.
assyadh
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Joined: Tue Sep 18, 2018 12:44 pm

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by assyadh »

Without going into Government policies (We don't want to get this topic locked :D ) This is a reminder that any "retirement" date for government sponsored account is subject to changes.

This is also one of the reasons why it's adviseable to diversify your type of accounts.

I will be holding US IRAs until retirement, and I have NO trust in the 59.5 years age staying there for another 30 years
Valuethinker
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Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by Valuethinker »

I wish I was young enough to be affected by this ;-).

The £1m limit was the killer fir any early retirement notions I might have had.

It's more a question of whether I can keep working rather than that I want to retire.
minimalistmarc
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Joined: Fri Jul 24, 2015 4:38 pm

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by minimalistmarc »

I think I can take my DB pension from 50 and this can’t be changed. Thanks to government incompetence public sector pensions can be changed back to 1995 scheme from 2015 scheme backdated and up to April 2022.
Fortune Seeker
Posts: 104
Joined: Mon Apr 13, 2020 9:52 am
Location: UK

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by Fortune Seeker »

Wow, I was not even aware of that.

This makes me concerned about what age it will be when i retire in 2-3 decades (hopefully 2 if all goes well). Last 10 years they increased pension age for SIPP by 7 years. :annoyed not looking good.

Doesn't change anything for me right now though. My pensions are in 100% stock funds and will be there for a while.
theresearcher
Posts: 93
Joined: Sat Jul 25, 2020 12:51 pm

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by theresearcher »

This is not yet legislated. The U.K. Government has indicated an intention to put this change in place by 2028, however the enabling legislation has not been passed (or introduced). https://www.ftadviser.com/pensions/2020 ... ike-to-57/
c-strong
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Joined: Sun Aug 02, 2020 4:10 pm

Re: UK SIPP Pension Freedom age raised to 57 - How does it affect your plan

Post by c-strong »

Fortune Seeker wrote: Sat Sep 05, 2020 7:40 pm Wow, I was not even aware of that.

This makes me concerned about what age it will be when i retire in 2-3 decades (hopefully 2 if all goes well). Last 10 years they increased pension age for SIPP by 7 years. :annoyed not looking good.

Doesn't change anything for me right now though. My pensions are in 100% stock funds and will be there for a while.
The government has indicated an intention to peg the minimum pension age to 10 years before the state pension age. As the latter is currently scheduled to rise to 68 between 2037 and 2039, you should plan on the basis that you won’t be able to access your pension until age 58. Though there is plenty of time for successive governments to muck about with the rules some more!
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