Private pension age could rise to 58 earlier than planned - check if you're affected

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An expert has described the potential rise as "perfectly plausible"

Millions of workers planning an early retirement could face a nasty surprise, as pension experts warn the minimum age for accessing private pensions may jump to 58 by the late 2030s.

That timeline is significantly earlier than the mid-2040s schedule most savers have been counting on.

At present, adults can dip into their private or workplace pension pots from the age of 55. A planned increase to 57 is already set for April 2028.

However, a faster-than-expected rise in the state pension age could drag the private pension threshold up with it.

The Government has long maintained a policy of keeping the private pension access age a decade below the state pension age, meaning any acceleration to the latter has a direct knock-on effect.

The rationale behind this decade-long gap is straightforward: it helps ensure people do not exhaust their retirement savings before they become eligible for the state pension.

The state pension is available to all retirees who have built up sufficient National Insurance contributions throughout their careers. Private pensions, by contrast, consist of either employer-sponsored workplace schemes or personal retirement savings.

Under existing legislation, the state pension age is due to reach 68 between 2044 and 2046. But that timetable is currently under review.

A recent report from the Office for Budget Responsibility suggested the increase could happen much sooner.

The Government's spending watchdog indicated it expects the state pension age to hit 68 between 2037 and 2039 — roughly seven years ahead of the original plan. The Treasury has not ruled this out.

If the state pension age does reach 68 by the end of the 2030s, the private pension access age would almost certainly follow suit and rise to 58.

Steve Webb, a former pensions minister and now partner at LCP, told The i Paper: "In theory, in 2037 or realistically 2039, because that's when we actually get to 68 the private pension age could go to 58."

Mr Webb went further, describing a rise to 60 as "perfectly plausible."

He added: "There is a possibility that the private pension age could move up faster than the state pension age."

Although this does not yet represent official Government policy, the prospect has alarmed retirement planners who had been working to the mid-2040s timetable.

Tom Selby, head of retirement policy at AJ Bell, said the connection between state and private pension ages "has been seen as a sensible step to ensure people don't access their private pension too early and run out of money."

He acknowledged that future increases would curtail the flexibility younger generations have over when they can tap into their savings. However, he noted the access age would still be relatively young for healthy adults.

A Pensions Commission report published last year reinforced the case for working longer.

It warned that someone retiring at 57 rather than 65 could see their annual workplace pension income fall by close to £9,000 a year, underscoring the financial cost of drawing down savings too early.