Pension savers could be forced to wait until 60 before accessing their retirement pots, a former pensions minister has said.
Workers are usually barred from withdrawing their funds before age 55, rising to 57 from April 2028.
However, Sir Steve Webb, now a partner at LCP, said this could be increased to 60 because Labour had “no fondness” for the powers that pension savers have over accessing their pots.
He added that raising the normal minimum pension age (NMPA) to 60 would bring about “administrative chaos” for savers, providers and the Government.
Delaying the age at which savers can access their private pensions could push them to work for longer and save more for retirement, making it more likely that their retirement pots will last until death.
But it could also affect those with plans to go part-time in their 50s or use some of their savings to fund holidays or give cash gifts to children and grandchildren.
The NMPA was last increased from 50 to 55 in 2010. At that time, most pension savers were forced to buy an annuity to guarantee a lifelong income in retirement.
But in 2015, George Osborne, then chancellor, announced “pension freedoms”. Although there were no changes to the pension age, savers were given a range of new options for their retirement wealth – including withdrawing it all in cash.
Britain is mired in a retirement crisis, with 15 million people under-saving.
The Pensions Commission, set up to tackle the issue, said earlier this year that around a third of pots were accessed early and the proceeds were often spent on cars, holidays and renovations. It is expected to report back early next year.
The state pension age is also on course to increase from 66 today to 67 by 2028 and 68 by 2046.
However, the State Pension Age review, launched last year, is widely expected to recommend swifter increases when it reports back in 2029.
Sir Steve said: “With people living into their late 80s and beyond, it wouldn’t astonish me if the age [at which you can access private pension savings] increased to 60. There really is no fondness for pension freedoms in the Labour Party.
“However, I’d rather they leave it at 55 because the transition to 57 is very messy and it achieves nothing but administrative chaos.
“First of all, whether you take your pot at 55, 57 or 60, it’s still not going to be there when you’re 87.
“Secondly, the typical pot accessed by people in their late-50s is under £10,000, and spread over a 30-year retirement, the impact would be very low.”
A Treasury spokesman said: “We do not comment on tax policy speculation. The normal age at which people can access their private pensions will be 57 by April 2028, as set out by the Conservative government in the Finance Act 2021-22.
“There are no further legislated changes to the normal minimum pension age.”
