What does the 2010 retirement age change mean for you?

Mar 9, 2010

The minimum retirement age is increasing to 55. What will it mean to you?

On 6 April 2010, the minimum age at which pension scheme members / policy holders will be able to access their pension benefits will jump from 50 to 55.

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

How does this affect me?

The minimum retirement age change will have different implications depending on your age:

Aged 50 – 54 on 5 April 2010:

If you will be between 50 and 54 on 5 April 2010 and wish to access any part of your pension benefits in the near future you must do so before 6 April 2010, otherwise you will lose access to your pension for up to 5 years.

Under 50 on 5 April 2010:

If you won’t reach age 50 until after 5 April 2010, but are planning to retire before your 55th birthday you will now have to wait until age 55 before you can receive any pension income or take a tax free cash lump sum from your pension. 

Remember, you no longer have to take all your pension benefits i.e. the pension income and the tax free cash lump sum, at the same time.

You can now take the tax free cash lump sum and defer taking any pension income until such time as it is required.

Increasingly we are seeing that people in their 50’s are attracted by the availability of a tax free cash lump sum. The reasons for taking a tax free cash lump sum earlier than may have originally been intended, are many and varied, but typically include the financing of such things as; a second home, a daughter’s wedding, university funding, capital investment into their own business etc.

Be prepared – don’t miss out

Regardless of whether or not an individual will be affected by this age change, it is a fact that far too many people do not review their pension arrangements from one year to the next and underestimate the cost of providing realistic retirement benefits. We therefore urge all people to take a fresh look at their pension arrangements and to contact Wilby Limited in the first instance with any resulting queries. 

Contact Andrew Pearson - 01422 358525 or email andrew.pearson@wilbyltd.co.uk