Draft legislation is proposing to increase the National Minimum Pension Age (NMPA) from 55 to 57 from 6th April 2028.
This increase to the normal minimum pension age has been in the pipeline since 2014. There will be no phasing of its introduction. This means:
If you were born before 6 April 1971 you will continue to be able access your pension at age 55
If you were born after 5 April 1973 the earliest date you may access your pension benefits will be delayed by two years
If you were born between 5 April 1971 and 5 April 1973, you will have a window from your 55th birthday to 6 April 2028 to take benefits before the minimum pension age increases to 57. If you don’t access your pension during this time, you will need to wait until your 57th birthday.
Protected pension ages
Schemes that had the right to take benefits at 55 written into their rules as at 11 February 2021 will be able to protect that age for existing members and any others that join such a scheme by 5 April 2023.
The protection is only given if the rules specifically gave an ‘unqualified right’ to retire at 55. This isn’t simply the ability to take benefits from age 55, but rather that the member doesn’t need the consent of the trustees, the scheme administrator or employer to take benefits at this age. Consent is likely to be a more common feature in occupational schemes.
However, many SIPPs and personal pensions will have adopted model scheme rules which link the age benefits can be accessed to the ‘normal minimum pension age’ rather than an actual age such as 55. These schemes will not benefit from protection.
Clients with existing protected pension ages, such as pre-A-Day occupation related early retirement ages and those who retained an early pension age in 2010 when the minimum pension age changed from 50 to 55, will not be affected by this latest increase.
No need to retire or crystallise all benefits
A current condition of taking benefits with a protected pension age is that the member must crystallise all the benefits under the scheme at the same time.
This requirement won’t apply to this new protection. Members should therefore be able to access benefits flexibly without losing their protected pension age.
Additionally, there will be no requirement to stop working for the sponsoring employer of the occupational scheme in order to protect a pension age in that scheme from the 2028 increase.