From 6 April 2028, two major changes to pensions in the UK will come into effect; the normal minimum pension age (NMPA) will rise from 55 to 57, and the State Pension Age will increase from 66 to 67.
While these changes are significant, many people are unaware of how they might be affected. In this article, George Square provides an overview of what’s changing and what it might mean for your retirement plans.
Pension ages: key definitions
The world of pensions can feel complex, especially with multiple “ages” to keep track of. Here’s a simple guide to some of the key terms:
- Normal minimum pension age (NMPA): This is the earliest you can typically start drawing from your workplace or personal pension. From 6 April 2028, this will increase from 55 to 57.
- State Pension Age: This refers to when you can begin claiming your State Pension. From the same date in 2028, this will rise from 66 to 67.
- Retirement age: There’s no longer a fixed retirement age in the UK (employers could previously require employees to retire at 65). Now, you’re free to decide when to retire and the majority of people can work beyond age 65 if you wish to and are able.
- Protected pension age (PPA): A PPA allows some individuals to access their pension before the NMPA, even after the changes come into effect. This can vary depending on the details of your pension scheme – we’ve shared more details on this below.
Will the change affect you?
The change to the NMPA will affect those born on or after 6 April 1973, who will reach age 55 on or after 6 April 2028. They will now need to wait until age 57 to access pension benefits without suffering an unauthorised payments charge (unless they have a PPA).
Could you be exempt from the changes?
Members of the firefighters, police and armed forces public service schemes will not be affected by this increase, nor will anyone who is retiring due to ill health.
Those with a PPA may also be exempt from the changes, however this depends on specific details of your pension scheme.
You might have a PPA under certain conditions:
- Existing rights before the changes: If, before 4 November 2021, you already had an unqualified right to take your pension before 57, this could mean you retain your earlier pension age.
- Pension scheme rules: The scheme’s rules as of 11 February 2021 must have explicitly allowed access before age 57.
- Transfers: If you were in the process of transferring your pension to another scheme before 4 November 2021, you might also retain your protected age.
It’s important to note that these exemptions are scheme specific; in other words, you may have a PPA for one pension scheme but not another, and the age at which you can access your benefits will depend on the scheme’s rules before the changes. The rules are complex and can feel difficult to navigate; George Square’s team of independent advisers would be happy to advise you based on your specific circumstances – please do get in touch if you’d like assistance.
Planning your retirement under the new rules
If you’re unsure about how these changes will impact your retirement plans, now is a great time to review your pension arrangements. Here are a few steps to consider:
- Check your pension age: Look into your pension schemes to confirm if you have a PPA or if the new NMPA will apply to you.
- Understand the rules: If you believe you have a PPA, ensure you meet the eligibility conditions.
- Seek advice: Navigating pension rules can be tricky, especially with these changes. Consulting with an independent financial adviser can help you make the most of your retirement planning.
Take action now
Retirement planning is one of the most important financial decisions you’ll make, and these changes highlight the need to stay informed. Whether you are years away from retirement or it’s just around the corner, understanding your pension age can help you plan with confidence.
George Square’s friendly team of independent financial advisers can help you navigate the complexities of pensions and create a retirement plan that works for you.
To ensure you’re prepared for the upcoming changes, please get in touch with George Square today.