A Retirement Cloud on the Horizon - The Finance Act 2021/22

Since the Covid-19 pandemic, perceptions of retirement have changed. The misconception that many have a desire to work later in life seems perhaps a little optimistic given the latest trends of work-life balance and hybrid working. Despite these latest flexible trends to working for many, the recent pandemic may well have focused a desire to start enjoying life after work as soon as possible!

Nevertheless, the original Government retirement grand design is continuing to unfold over the coming period with the state pension retirement age currently age 66 since October 2020, moving in four years’ time on a phased basis to age 67. The eventual objective is to move the state pension age to age 68.

Why does this matter you may ask? After all, most employed people will have other provisions either through occupational, workplace or private pensions which allow you to retire earlier, don’t they? Well, they did – it is not that long ago savers could access their pension at age 50, then it moved to age 55 and now the innocuously named Finance Bill 2021/22 currently going through Parliament will mean the earliest normal minimum retirement age will move for most of us to age 57. The exception being retirement at an earlier age on grounds of ill health or certain public service pension scheme such as police, fire fighters or armed forces.

So, if your birth year is 1973 onwards your retirement landscape is changing significantly, and whilst the Government has complete control over the state pension age, many of us - if alert and aware - will be able to use a new protection regime (Protected Pension Age) that will be introduced.

Unlike previous pension protection measures, there will be no need to apply if you are eligible, and to be eligible you must have been a member of a registered pension scheme (Occupational and non-Occupational) on 21st February 2021 that provided the ‘unqualified right’ to members to retire at age 55 (unqualified meaning employers or trustees’ permission not required).

So, if you qualify for this right and therefore have the ability to potentially maintain a retirement age of 55 you are in a privileged position and must understand it is not a right ‘set in stone’. So, care will need to be taken when for example moving jobs, changing pension schemes, taking benefits or transferring pension funds to schemes that do not meet the eligibility requirements (offering the unqualified right to retire at age 55) to avoid losing or limiting this option.

As with all pending legislation, amendments will happen before it is finally enacted, but essentially the main objective to move the normal minimum retirement age to 57 will occur so that it aligns with being 10 years earlier than the state pension age of 67. However, if you are unaware of these pending changes, we recommend that you seek professional advice and explore your options to retain an early retirement age.

Nigel Saunders is an Employee Benefits Consultant at Acumen Employee Benefits, part of The Financial Planning Group in our Aberdeen office.


The content within this article should not be looked upon as advice or recommendation. Clients should seek appropriate guidance from their employee benefits consultant.

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