Pensions update – Trustees face scheme adaptations

Pensions trustees will have to consider whether they need to amend their scheme rules on pension age to comply with new pensions simplification legislation.

Under the terms of the Finance Act 2004, the earliest age from which pension benefits may be taken will increase from 50 to 55 years by 2010. Schemes will have to decide how and when to implement this change.

Those employees with a right to retire before 55 years on April 6, 2006 will have this protected provided the scheme rules contained such a right on December 10, 2003.

Peter Tompkins, pensions consultant at PriceWaterhouseCoopers (PWC), said: “This [change in pension age] is a reaction by the government to the fact that people are living longer, and the age they retire should reflect this.”

Employment sectors where reduced retirement ages exist, such as for professional sportspeople, will be affected by the changes. If they retire early, they will encounter a reduced lifetime allowance of 2.5% for each year up to the national minimum pension age of 55 years.

Early retirement with full benefits, however, will still be available on the grounds of ill health.