It is possible to take benefits from an individual allowance from the age of 55. In the past, before 6 April 2010 the minimum age was 50. Up to the 22 June 2010 members were required to purchase a pension or prepare an otherwise secured allowance (ASP) before they reached their 75th birthday. The government then announced a cap on what it called the effective need for compulsory annuitisation at age 75. After the intervening period, in which interim rules applied (the age for compulsory annuitisation was increased to age 77), it has from 6 April 2011 introduced new rules that remove the need to buy an annuity at any age with the planholder able to enter into pension drawdown as an alternative and take withdrawals right from the fund.
There are two eventualities in which an affiliate may take benefits before the age of 55.
Some private allowance/stakeholder schemes and retirement pension policies allow members to draw benefits before the age of 50 because they are in a special occupation – professional footballers, for example.
There are several supposed cash in pension early plans that are actively marketed on the internet. Almost of these are widely considered illegal, in breach of the annuity rules or maybe scams.
Individuals must have been members of such a scheme, or clients, at 6 April 2006 for this facility to apply. As long as benefits are taken in full from the scheme at the allowed lower age, then the facility will remain. The member’s lifetime allowance will be reduced by 2.5 per cent for each complete year before the standard minimum pension age that the benefit is taken. If a benefit were to be taken in 2011 by a professional footballer aged 35, the reduction in his lifetime allowance would be 50 percent (20 years x 2.5 percent). Further pension rights may accrue but the individual in this example would only be able to use the remaining 50 % of his lifetime allowance for the sake of amassing further tax-privileged savings.
Great care ought to be taken if you are thinking about a project that permits you to draw down from your pension sooner than your 55th birthday, and you should always seek professional advice.
If you have any questions regarding pensions or financial advice, it is always recommended to seek expert fianancial advice from a financial adviser, who can put you on the right path for your financial future.