UK Government ministers have confirmed plans first announced six years ago to raise the age at which savers can take some or all of their savings from their pension funds from 55 to 57. 

The change will come into effect from 2028, meaning those aged 46 and below face having to rethink their plans if they had wished to use pension savings to pay off their mortgage or take early retirement. 

George Osborne, who as chancellor introduced the pension freedoms that allowed people to access their savings before state pension retirement age, always intended that the minimum age limit would rise eventually.

The following Conservative governments had failed to implement legislation for the change, leading the pensions industry to suspect that the plan had been abandoned, The Times reports. 

“That announcement set out the timetable for this change well in advance to enable people to make financial plans and will be legislated for in due course.”

Industry figures have now urged that workers should consider how the change in the law could affect them.

Jon Greer, of the financial services company Quilter, said: “This will be a blow to some savers that had hoped to retire at 55. A few diligent pension savers are lucky enough to be able to afford to retire at 55 with a pension pot sufficient to last the rest of their lifetime. But in future that age will switch to 57 before savers can unlock their tax-free cash and income from a retirement fund.

“Designed as a safety valve in the pension system, the minimum age for accessing a pension is intended to prohibit people from withdrawing too much of their pension too soon. Part of the trade-off for receiving pension tax relief and the perk of tax free cash is that savers have to commit to keep their money locked up till their mid-50s.

“If you want to retire before the age of 57, the first thing to do is think very carefully about whether that is really financially viable and speak to a financial adviser. Given future increase in state pension age it means you will likely have over a decade drawing on your own savings before any state support kicks in. Many people underestimate their longevity as it is and risk running out of money so selecting an early retirement date needs to be planned carefully.

He added: “Some people choose to use cash from their pension before they retire as well. A common reason for doing so is to clear debts, such as any outstanding mortgage. If this is part of your financial plan it is important to check how you may be impacted.

“Until we know exactly when the change will be implemented it is difficult to say with certainty who will be caught but the cut-off point is probably going to be around those born in the early ’70s and later.”