The age at which we can access our private pension savings is going up from 55 to 57 in 2028.

Not for the first time when it comes to pensions policy though, the devil is in the detail. 

That said, we should perhaps give thanks that as a result of some intense lobbying from the pensions industry, it hasn’t ended up being even more complicated.

These changes, which were finalised on 4 November, will have both short and long-term consequences — not just for pension savers, but also for anyone advising on or administering those pensions.

How we got here

The change was first set in train back in 2014.

This was when the coalition government confirmed it would be raising the minimum age to access pensions to keep it 10 years below state pension age, which will increase to age 67 by 2028.

Fast forward to earlier this year, and the current government kicked off a consultation process on how to implement the change.

It found itself in a pickle though. Some pension schemes have written into their rules an explicit entitlement to take benefits from age 55, while others simply refer to ‘normal minimum pension age’.

Following legal advice, the government has concluded where schemes have age 55 rules in place, it's unable to remove a member’s right to take benefits at that age and such rights would have to be protected.

Initially it decided to keep open a two-year window, through to April 2023, during which people could take out membership of an age 55 scheme.

There was strong pushback on this from the industry, which argued the move would cause confusion, distort market competition and could potentially increase the risk of fraud.

In response the Treasury announced it would keep its policy of raising the age to 57, and it would respect people’s right to take their benefits from age 55 where such rights already existed.

But there was more.

With effect from midnight on 3 November, the Treasury was closing the door on anyone creating new age 55 rights, for example by transferring a non-protected pension into a scheme with an age 55 rule.

The government has also confirmed that if someone transfers an age 55 pension, they will retain the age 55 entitlement in the new scheme but only in respect of the portion of the pension to which the age 55 right was originally attached.

What happens next

This all largely makes sense, but it does leave the pensions industry with a few complications to deal with for the future.

Some occupations, such as the uniformed services, will retain a right to pension benefits at age 55. Some private pension schemes will have these same rights.

So the first step for anyone advising on or administering a pension will be to check whether an age 55 entitlement applies.

It'll be important to establish what proportion of the overall pot the age 55 tag applies to.

If someone has transferred an age 55 pension into another existing arrangement and then made contributions on top, then there could be both age 55 and age 57 money in the same set-up.

Then there's the government's plans for automatically consolidating small pots to consider.

If these plans ever make progress, then the small pots solution will have to track the pension ages attached to each pot of money.

The same is true of the pensions dashboard, which will hopefully one day show anyone who asks information about their diverse existing pension arrangements. This too could include the date on which they are entitled to access their pensions.

It also begs the question of what will happen when a future government raises the state pension age to 68.

This is currently scheduled for 2046, but could possibly be brought forward to 2039, if the government follows through on a previous announcement.

When the times comes to try and repeat this exercise and raise the new normal minimum age to 58, will the government find that by then every pension provider has moved to pre-empt this, and written age 57 into their rules?

Finally, it seems reasonable to ask whether the current rules around age 75, at which age tax relief on contributions stops and the tax treatment on death changes, should also be updated.

With the minimum age of access being increased from 2028, surely the maximum age at which the tax breaks apply should also be nudged upwards.