Millions of savers will be blocked from transferring their pensions to access them at age 55 after the Treasury closed a loophole. HM Treasury has clamped down on pension transfers in advance of a planned increase to the minimum age at which savers can access their pension from 55 to 57. From 2028, savers will have to wait an additional two years before they can dip into retirement savings without triggering punitive tax bills. The pensions industry has criticised the plans, warning that some pensions will still be accessible at age 55 while others will be locked until 57. Some schemes explicitly state that savers have an “unqualified right” to take pension benefits at 55 and this will still hold. Originally the Government was to allow savers to free up their pension two years sooner by transferring their retirement pots to a scheme that allowed it. This loophole has since been closed after repeated warnings from experts. One of the problems highlighted by commentators is that millions of savers will now have a mix of pensions, with some pots they can access at age 55, and others where they need to wait to 57 making it harder to plan for retirement. Anyone who made a request to transfer their pension to a pension scheme with a protected pension age of 55 or 56 before Nov 3 will still be able to keep the protection and the change will not affect them.
Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of November 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.