Consumer > The 2010 Age Change
The 2010 Age Change
Do you know what important event is happening in 2010? (apart from a major football tournament of course!) The minimum retirement age is increasing from 50 to 55.
How does this affect you?
From 6 April 2010 it will no longer be possible 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.
In depth
For more information about the change to the minimum retirement age download our client information leaflet.
This will have different implications depending on your age:
- Aged 50 – 54 on 5 April 2010:
If you wish to access your pension benefits in the near future you must do so before 6 April 2010, otherwise you will lose the right to access your pension benefits for up to five years.
- Under age 50 on 5 April 2010:
If you were planning to access your pension before your 55th birthday you will now have to wait until age 55 at the earliest.
I will be between 50 and 54 on 5 April 2010.
What options do I have?
It's not too late to act. You still have time to seek financial advice and make any necessary arrangements before 6 April 2010. There are a number of options available to you – three of the most common options are listed below:
- Buy an annuity :
- Transfer to an income drawdown plan:
- Do nothing:
You could choose to buy an annuity before the change in the minimum retirement age takes place. An annuity provides a regular income, usually for the rest of your life, in return for a lump sum payment, typically from a pension plan. It is usually possible to take a tax-free lump sum of up to a quarter of the value of the plan in return for a lower regular income. You must take any lump sum at the same time that you buy an annuity.
If you need to withdraw a lump sum or an income from your pension, an income drawdown plan could achieve this for you. This is an alternative to buying an annuity. An income drawdown plan can offer more flexibility than an annuity as it's possible to change the income, within set limits, over time. But it also has more risk as the income is not guaranteed, as it is with an annuity, and may reduce. For this reason income drawdown is not suitable for everyone.
But remember you won't be able to access your money until age 55.
Whatever you decide to do you should first speak to your financial adviser to review your pension planning and talk through the options available. This way you can make an informed decision.
I will be under 50 on 5 April 2010.
Surely the change won't affect me?
You may not feel any urgency to act on this change just yet. But your retirement aspirations might not allow you to ignore this.
If you are planning to take a lump sum or an income from your pension plan before age 55 for a specific purpose you will now have to reconsider your long-term plans as you will have an additional five years to wait before you can take your pension benefits.
Even if you are not age 50 by 5 April 2010 it makes sense to speak to your financial adviser to help you plan your financial future now.
What should I do next?
Whatever your circumstances or retirement plans, it pays to get impartial advice. A financial adviser will be able to explain how the minimum retirement age change could affect you, what your options are and recommend a course of action that's right for you.
By speaking to a financial adviser you can ensure you make informed decisions about your future.
If you don't currently have a financial adviser you can find details of independent financial advisers (IFAs) in your area by using the IFA Promotions search. Remember that you may be charged for the service provided by a financial adviser. Costs will be confirmed by the adviser beforehand.
Getting financial advice now can help ensure you are not caught out by this change.
