Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Can I protect my right to claim a pension at 55?
I will be 55 in September 2028 and it’s possible I will be adversely affected by the increase in the normal minimum pension age to age 57. Is it possible to protect my rights to access my pension at age 55 before the change comes into effect? I hold a SIPP with a large investment platform.
Tom Selby, AJ Bell Senior Analyst says:
The normal minimum pension age (NMPA) is the earliest point in time a saver can access their retirement pot. This is set at age 55 but there are plans to increase this to 57 from April 2028.
However, it isn’t quite as simple as that. Firstly, the Government is protecting a number of specific professions – including the fire service, police and armed forces – from the rise.
Secondly, and more controversially, the Government wants to create a new ‘protection’ regime to allow people in pension schemes offering an ‘unqualified right’ to a specified pension access age lower less than age 57 to keep it.
It’s worth pointing out that these are just proposals at this stage and haven’t yet been written into UK laws.
Under the plans, anyone who was a member of a pension scheme which gave them an ‘unqualified right’ to access their retirement pot before age 57 will be able to retain that right.
Anyone who joins a pension scheme by 5 April 2023 that offered an unqualified right to a minimum access age below 57 on 11th February 2021 will also be able to keep that lower access age. This would be called their ‘protected pension age’.
When someone transfers from a scheme with a ‘protected pension age’ to one without a protected pension age, they will be able to retain the lower pensions access age on the transferred funds.
Whether or not an unqualified right to access your pension before age 57 exists will be entirely random, based on the wording of scheme documentation written by pensions lawyers some time ago.
It is possible that you will be able to retain an NMPA of below age 57 if either:
– Your existing scheme offered an unqualified right to an NMPA of age 55 on 11 February 2021, or
– You transfer your funds to a scheme which offered an unqualified right to an NMPA of age 55 on 11 February 2021 by 5 April 2023.
However, I would strongly suggest you exercise caution before making any decisions about your pension on this basis.
Even if an alternative scheme can offer an earlier NMPA there are other factors – such as costs and charges, service and choice – which need to be carefully considered when making a transfer.
And for most healthy people accessing their pension at either age 55 or 57 will leave them at risk of running out of money early in retirement.
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provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.