On 11 February HMT launched a consultation on the implementation of increasing the minimum pension age from 55 to 57 in April 2028. This is the age at which individuals can access their pension benefits without incurring an unauthorised tax charge.
The government had previously signalled its commitment to increase the minimum pension age to 57 in 2028 in its response to the Freedom and Choice in Pensions consultation in July 2014. The Government’s justification is to reflect increases to life expectancy since the minimum pension age was last increased from 50 to 55 in 2010, so that tax efficient pension savings are only used to provide income and security in later life (with a broad intention of allowing access around 10 years before State Pension Age).
Assuming the change proceeds, the LGPS regulations will need to change, specifically the minimum age at which early retirement benefits, flexible retirement, redundancy benefits, and efficiency benefits can be paid. The proposals will also add complexity to the scheme as members already in the scheme will receive protections and, like similar recent changes, will present a communication challenge. For employers, there will be less flexibilities for workforce restructuring. The consultation closes on 22 April 2021.
NILGOSC’s response can be found below.