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When can you access your pension? It might be further away than you think

September 01, 2021

The age you can access defined contribution (DC) pensions is rising. Research suggests that many people are unaware of this, but it could affect your retirement plans.

At the moment, you can access money saved into a DC pension scheme from the age of 55. However, from 2028, this will rise to 57. If you’d hoped to access your pension at 55, whether you plan to retire then or not, the additional two years may mean you need to rethink your plans.

The pension age is rising as longevity increases, which means your pension will need to last longer. When it rises in 2028, it will be 10 years before you can claim your State Pension. This provides retirees with some flexibility to retire sooner and create the lifestyle they want. The government could also announce further increases to the pension age in the future.

7 in 10 adults aren’t aware of the rising pension age

While 83% of UK adults are aware there is a minimum age to access a DC pension, many are unsure when this is, according to an Aegon survey. Two-thirds of people questioned correctly identified 55 as the current minimum. But just 22% knew that the minimum pension age will increase to 57 in 2028.

If you don’t turn 55 until after April 2028, will the change affect your pension plans?

You don’t have to be planning to retire at 55 to be affected. Perhaps you’d hoped to take a lump sum from your pension to pay off the mortgage early or travel before returning to work. Or you may have been hoping to cut back your working hours, using your pension to bridge the gap before you can claim the State Pension.

Two years may not seem like much, but if you’d planned to use your pension in some way before turning 57 it can leave a hole in your finances. It may mean plans you’re looking forward to are no longer possible without adjustments. Understanding if it’ll affect your goals now can help keep you on track.

So, if after looking at your plans you realise that the rising pension age will have an effect on them, what can you do?

1. Push your plans back

The simplest solution is to simply push back your plans that relied on accessing your pension back by two years. In some cases, these two years may make little difference to your overall lifestyle and goals. If this is the case, it’s something you may want to consider. And if this is something you’re thinking about, you should weigh up your priorities now and in the future.

2. Change your plans

Depending on what your plans are, adjustments may mean they’re still achievable without having your pension to tap into. If you’d hoped to cut back working hours, cutting back your disposable income in the short term could make sense. Or if you’d planned to take a lump sum from your pension to travel, a shorter trip may still mean you’re able to do this. Reviewing what your goals are can help you figure out what changes make sense for you.

3. Increase your savings now

If your 50s are still some time away, knowing that the pension age is rising gives you time to act. Putting more money away in a savings or investment account that will cover your plans means you won’t have to make changes in the future. If you’re not sure which is the best way to save for your future, please contact us.

4. Use other assets to bridge the gap

You may be able to use other assets to fill the pension gap. This could include savings, investments, or property. Depleting other assets now means you can forge ahead with plans, even if your pension isn’t accessible. However, keep the bigger picture in mind: could using these assets now affect longer-term plans or your financial security?

If the rising pension age could affect you, we’re here to help. Please get in touch to discuss your retirement aspirations and how your assets can be used to help you achieve them.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

What our clients say

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I would highly recommend Darius and John. I’ve used a financial adviser previously and could never get in contact with them when I needed their help. Stratton Wealth Management have been excellent from the start. They are always available to talk, and they also don’t talk in financial jargon!

Dave Rigby -

A client since 2015

Having recently transferred my financial management to Stratton Wealth Management, I have been extremely impressed with the highly professional service I have received. I feel I have been fully involved in all decision making, and the company's highly skilled advisers have shown commitment and patience in any dealings I have had with them. I have also always found them to be easily accessible for any discussion I may require.

Denise Thornton -

A client since 2019

As a business owner and father of four children, finances are usually the last thing we think about. Stratton oversees and manages our finances, both in terms of advice for my business and our personal investments. It is comforting to know that our retirement, investment and life insurance planning has been taken care of. Darius and John are always so efficient in dealing with our affairs. As someone with no real understanding of the ins and outs, it has been fantastic to have experts giving us great advice and making sure our best interests are always the top priority.

Lee and Claire Parkinson -

Clients since 2016

Darius deals with my family’s finances and is a very trusted adviser. We meet a number of times a year, but I know I can call him any time if I have any questions. He is proactive, helpful and friendly!

Jonathan Dennis -

A client since 2019

I knew I needed to begin saving and planning for the future but didn’t know where to start. Stratton helped me to understand my finances and put together a savings plan that is affordable and works for me. I now have and an ISA and a pension, and whilst retirement is many years away, I have the peace of mind that I am saving for my future. I look forward to working with them for many years to come.

Martin Corrigan -

A client since 2016

I have been impressed with the advice and service provided by Stratton Wealth Management and have always found Darius to be approachable, dependable and highly professional in his approach. It is reassuring to be able to have such a high level of confidence and trust when it comes to financial advice.

Russell Jones -

A client since 2018

Many thanks indeed for your in depth report for my client Mrs H – it is most thorough and above all readable. This might sound particularly strange; however you may well gather that in my profession we see many such reports, and I often feel that if the adviser fills it with charts and graphs it evidences a level of research. In truth most of what is produced is readily obtainable from the internet.

I would like to thank you (and your organisation) for your prompt and professional attention to my requirements on behalf of my client. As a practice we shall definitely be putting Stratton Wealth Management on our “preferred supplier list".

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A client since 2015