PERSONAL ACCOUNT

We will be waiting longer for of our pensions, not just the state pension

News on Wednesday that a cohort of almost six million people – those in their 40s, and they include me – would have to wait longer for their pensions caused predictable dismay.

Those born between 1970 and 1978 will get their state pension at age 68, under a proposed re-jig that brings forward the existing timetable to gradually increase the state pension age. As I’ve said here before, there are excellent reasons to limit the burden of state pensions. Other countries, such as Brazil, have become crippled by their equivalent promises. Unless reform is planned decades ahead, the public understandably becomes enraged at what they feel is a lost entitlement.

The key is to remove the issue from the bullring of party politics and give generations enough notice of change so they can plan and adjust. The proposals seems uncommonly far-sighted and I for one won’t complain.

But what few people realise is that the state pension age is a trigger for other pensions, too.

The “private pension age”, if you like, is linked to the state pension age.

Back in the days when most of us ended up using our work and private pensions to buy annuities (insurance policies that pay income for life) this did not matter so much. Most of these pensions would convert to annuities when the savers were in their 60s.

But we now live in the age of “pension freedoms”, following the huge shake-up initiated by George Osborne in 2014 and effective from 2015.

This gives people access to pension cash from age 55. At least at the moment.

In fact the Government has indicated previously this age will rise, although it has not made the point very loudly. In the consultation on the issues around pension freedoms, it proposed “to increase the minimum pension age from 55 now, to 57 from 2028, alongside the increase in state pension age to 67.

“From then on, the minimum pension age would remain 10 years below state pension age.”

If that comes to pass I could expect to access my personal or work pension money from age 58, rather than 55. This is worth understanding fully, as the freedoms are already encouraging people to think more broadly about how they plan to use their pension cash. Many would still expect or hope to be working in their late 50s, but they may even so wish to access some of their pension in order (for example) to meet children’s tuition fees or other one-off costs. Now those plans, too, will need adjustment.

The axing by banks of legions of branches is a trend that has been going on for decades. The closures are regrettable for the individuals or

Too much, or too little? Other countries have become crippled by state pension commitments