Changes To The Normal Minimum Pension Age

Author Aventur • 3rd Sept 21

Who Does It Affect And How?

Did you know that the normal minimum pension age (NMPA) in the UK is rising from 2028?

In an announcement made by the UK government last month, it was revealed that the NMPA would be rising from 55 to 57 as of 6th April 2028.

So who exactly does this change in legislation affect, how exactly will they be affected, and what can you do to minimise the impact it has on your future? That’s what we’re here to tell you…

Who Will Be Affected?

People who are part of a registered pension scheme (i.e. one that is registered under Chapter 2 of Part 4 of the Finance Act 2004) who do not have a protected pension age will be affected. The change will only affect you if you were born on or after 6 April 1971.

There is one exception, though. Members of the firefighters, police, and armed forces public service schemes will not be affected by the change.

How Will They Be Affected?

Anyone affected by the legislation change will not be able to access their scheme benefits before age 57 after 5 April 2028. Here’s a little more info about exactly how it will work for each age bracket:

  • Those born after 5 April 1973 will have the earliest date they can access their pension benefits delayed by two years, from 55 to 57.
  • Those born between 5 April 1971 and 5 April 1973 will have a window from their 55th birthday until 6 April 2028 to take benefits before the minimum pension age increases to 57. If they don't access their pension during this time, they will need to wait until their 57th birthday.

Scheme administrators of registered pension schemes will also be responsible for ensuring that these changes are implemented in their systems.

How Can You Minimise The Impact Of The Change?

For most people, being unable to access their pension at such a young age isn’t too much of an issue. But, for those that were betting on being able to do this, there are options…

The first option is to opt for (or transfer to) a protected age pension scheme. Certain occupations are eligible for a protected pension age under a personal pension scheme (PP) or retirement annuity contract (RAC). The majority of these occupations are athletic in nature, but some other occupations may also qualify. Even if you do not currently have a protected age pension scheme, you may be able to transfer to one, as long as you do so before 5 April 2023. If you’re not sure if you are eligible to do so, our experts can help. Get in touch today.

For those who had planned to retire at age 55 or 56, there will be other, potentially more tax-efficient ways, to do so. By keeping a portion of your savings in ISAs, bonds, and collectives, your potential liabilities can be reduced, making the most of tax allowances / lower tax bands. This means more money for you to enjoy your retirement!

If you reach 55 in 2027, you may be able to begin taking benefits but have to stop from 6 April 2028. There are ways to plan for this, though. For example, by designating enough funds into drawdown before the deadline to cover yourself until you can begin to access your pension pot again.

If you’re looking for more advice on pensions, retirement, or wealth management in general, Aventur can help. Our team of financial experts, aided by some of the most advanced financial technology available today, are well-equipped to support you on your financial journey.

Sources

https://www.gov.uk/government/publications/increasing-the-normal-minimum-pension-age-for-pensions-tax/increasing-the-normal-minimum-pension-age-for-pensions-tax
https://techzone.adviserzone.com/anon/public/pensions/minimum-pension-age-rise-to-57
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062220


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