‘Act now’ warning as retirement planning deadline looms

BUSINESS owners and entrepreneurs in their early 50s are being urged to act immediately if they want to avoid missing out on early retirement.

The warning comes from Moore and Smalley Chartered Accountants and Business Advisors as a key retirement planning deadline rapidly approaches.

From April 6 2010, pension scheme members will no longer be able to take their benefits at age 50 as the minimum pension age increases to 55.

David Gleeson, a financial planning consultant at Moore and Smalley Chartered Accountants and Business Advisors, says the law change has major implications for those in their early 50s who are planning to retire early or access money from their pensions to pay off mortgages.

He says some investors may be forced to wait years to dip into their pensions as the application deadlines being demanded by pension providers are much earlier because the process takes so long.

David said: “The new rules will affect people who are planning on phasing their pension benefits with a drawdown arrangement. After April 6 individuals will be unable to take instalments until they reach age 55, unless they are already drawing their pension before the deadline. This also creates a dilemma for someone planning to pay off a mortgage with a tax-free lump sum from their pension commencement.

“Anyone thinking they might like to take their pension benefits before 55 must act now or face the imposed delay, the worst case scenario being a five year wait for those who have just turned 50.

“Those affected by these changes should speak to their professional advisor immediately to mitigate any issues with their retirement planning and to decide whether early retirement is really the best option for them.”

More than four million people between the ages of 50 and 54 are potentially affected by the increase in the pension age - anyone born between April 6, 1955, and April 6, 1960.