Changes To The Normal Minimum Pension Age
Changes To The Normal Minimum Pension Age.
The age when you can start taking money from your pension is going up.
When can I start taking money from my pension?
As things stand, you must be aged 55 or over to start taking money from your pension. This is the normal minimum pension age (NMPA) and it’s set by the Government.
The NMPA isn’t the same as your pension retirement age, which is the age you’ve chosen to retire at. This selected retirement age could be years later than the NMPA. Nor is it the age you will receive your state pension.
From 6 April 2028, the NMPA will increase to 57. So, from 6 April 2028 you’ll need to be aged 57 or older before you can start taking money from your pension.
There are still some circumstances where you can take money earlier, like if you’re suffering from ill health or have a protected pension age.
What’s a protected pension age?
There are two types of protected pension age:
A protected pension age of 55 or 56. This will apply when the NMPA increases to 57 on 6 April 2028
A protected pension age of less than 55
If you have multiple pensions, having a protected pension age for one of them doesn’t mean you’ll have a protected pension age for all of them. You’ll need to check each individual pension.
A protected pension age of 55 or 56
When the new NMPA comes into force, you might qualify for a protected pension age of 55 or 56, depending on the details of your pension scheme.
If you do qualify, your protected pension age will most likely be 55, which means you’ll need to be 55 or older to start taking money from your pension.
You’ll have this type of protected pension age if all the following apply:
You had money invested in a pension scheme (an occupational or a personal pension) on 3 November 2021
The rules of that pension scheme gave you an unqualified right to take your pension savings from an earlier age than 57
Those rules were in place on 11 February 2021
You may also have a protected pension age of 55 or 56 if:
You transferred from a pension scheme that meets the conditions above as part of a block transfer (a transfer with at least one other member) to a new scheme after 11 February 2021. Your protected pension age will transfer from the old scheme to all your pensions savings in the new scheme
You transferred into a scheme that meets the requirements above on or before 3 November 2021 (or signed the paperwork before 3 November 2021)
If you transfer pension savings on an individual basis (instead of a block transfer) from a plan that has a protected pension age to one that doesn’t, the protected pension age might still apply to the transferred pension savings. However, this will depend on the terms of the pension scheme you’re transferring into.
What does that all mean?
In short, a protected pension age of 55 or 56 means you can take some, or all, of your pension from that earlier age, even after the NMPA increases to 57. You don’t need to take all your pension savings at once, and you don’t need to stop working.
A protected pension age of less than 55
This allows you to start taking money from your pension before you’re 55 if all the following apply:
You were a member of an occupational pension scheme on 5 April 2006
The rules of that pension scheme gave you an unqualified right to take your benefits from an earlier age than 55
Those rules were in place on 10 December 2003
If you qualify, your protected pension age will most likely be 50, which means you’ll need to be 50 or older to start taking money from your pension.
You may also have a protected pension age of less than 55 if:
You had a retirement annuity contract or personal pension scheme on 5 April 2006
You were in a prescribed occupation (for example, a sportsperson) with a particular early retirement age, generally between 35 and 45, and your chosen retirement age under the plan was before 50
What does that all mean?
In short, a protected pension age of less than 55 means you can take your pension from that earlier age, even after the NMPA increases to 57. However, you must take all your pension savings from the scheme where you have the protected pension age. Plus, if you’re a member of an occupational pension scheme you may also need to stop working.
How do I know if I have a protected pension age?
In most cases, you’ll need to ask your pension scheme provider or pension scheme trustees.
What to do now?
If you would like to discuss your retirement planning, and how these changes may impact you, please get in touchL 0161 928 2706 or info@parsonagefinancial.co.uk
Important Information
The content of this newsletter is intended for general information purposes only. It is based upon our current understanding of current legislation and HMRC guidance. While we believe this interpretation to be correct, it cannot be guaranteed that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Thresholds, percentage rates and tax legislation may change in Finance Acts and bases of, and reliefs from, taxation are subject to change and their value depends on an individual’s personal circumstances.
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