The minimum UK retirement age is increasing to 55

On 6 April 2010 the minimum age at which pension scheme members will be able to access their pension benefits will jump from 50 to 55. Does it affect you?

From this date it will no longer be possible for you to receive an income or a tax-free lump sum from a private pension before your 55th birthday, except on the grounds of very poor health.

How does this affect you?

  • Aged 50 – 54 on 5 April 2010: if you will be aged between 50 and 54 on 5th April 2010 and wish to access your pension benefits in the near future you must do so before 6th April 2010, otherwise you will lose access to your pension for up to five years.
  • Under 50 on 5 April 2010: if you won’t reach age 50 until after 5th April 2010, but were planning to retire before your 55th birthday you will now have to wait until age 55 to receive an income or take a tax-free lump sum from your pension.

If I am going to be between 50 and 54 on 5 April 2010

What options do I have?

There are a number of options available to you – three of the most common options are:

1. Buy an annuity

You could choose to buy an annuity before the change in the minimum retirement age takes place. Annuities provide a regular income, usually for the rest of your life, in return for a lump sum payment from your pension plan.

2. Transfer to an income drawdown plan If you need to withdraw an income from your pension, an income drawdown plan could achieve this for you. This is an alternative to buying an annuity.

It allows you to take an income from all or part of your pension while leaving the rest invested. You can increase and decrease your income, within set limits, to suit your needs.

3. Do nothing You may be sure you won’t need access to your money until age 55

So what do I need to consider?

You should consider taking independent financial advice to discuss the options available and which would be most appropriate for you. Visit our website for more information