UK Finance Bill Confirms Rise in Minimum Pension Age to 57 in 2028
28 February, 2023
The UK Finance Bill published in November 2021 (the “Bill”) has reconfirmed the rise in the normal minimum pension age (“NMPA”) to 57 on 6 April 2028. Currently the NMPA is age 55.
Surprising to many, the Bill includes changes from the draft rules issued earlier this year which would have given pension members until 5 April 2023 to either join or transfer into a UK pension plan that could offer a protected pension age of 55.
Now, under the Bill, only pension schemes that had the right to take benefits at 55 in their rules as at 11 February 2021 will be able to protect that age for existing members (and any others who joined the scheme by 3 November 2021). This is more commonly seen in occupational pension schemes, not UK personal pensions which often link the age benefits can be taken with the “normal minimum pension age” (e.g. not a specific age). People in such personal pension schemes will, consequently, have their minimum pension age rise to age 57.
The government amended the Bill to address industry concerns that unscrupulous advisors may encourage pension members to rush into pension transfers with poor outcomes before the transfer window closes on 5 April 2023.
This change to the NMPA will affect people without a protected pension age who were:
- born after 5 April 1973; or
- born between 5 April 1971 and 5 April 1973 who will have a window from their 55th birthday to start to draw retirement benefits before the NMPA increases to 57.
This two-year increase in the NMPA could result in added complexity for people who have more than one UK pension with different ages in which they can take pension benefits.
However, for most people an increase in the NMPA by two years is unlikely to significantly impact their retirement plans. Florin Pension’s view remains that, in most cases, it is best not to access a tax deferred UK personal pension or US retirement account until a person is in retirement.
It is important to note that changes could still occur to the Bill, as part of the parliamentary process, before it becomes an Act. We will update you as this matter develops to confirm how these changes could impact your UK pension in the future.