"Under existing rules, savers can draw on their private pension from age 55, 11 years before the state pension age, which is due to rise from 66 to 67 this year. Up to a quarter of a private pension, capped at £268,275, can be taken tax-free from that point. In a new intervention, the think tank said ministers should consider limiting access to private pension wealth before state pension age, either by raising the minimum access age or by reducing the amount that can be withdrawn tax-free."
"To reduce the financial incentives for people to retire early, the Government should consider limiting access to private pension wealth before the state pension age, the foundation said. This could be done either by raising the age at which tax-relieved private pension wealth can be accessed or by reducing the amount that is tax-free."
The Resolution Foundation urged limiting access to private pension wealth before state pension age to reduce incentives for early retirement and support labour market supply. Current rules allow savers to draw private pensions from age 55, eleven years before state pension age, and permit up to a quarter of a private pension, capped at £268,275, to be taken tax-free. The foundation recommended either raising the minimum access age or reducing the tax-free withdrawal amount. ONS data show unemployment rose to 5.1% from 3.6% in 2022, driven largely by people under 25 and over 50.
Read at Business Matters
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