Increase To The Normal Minimum Pension Age From 55 Years To 57 Years

• Published date: 28 September 2021
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions
• Law Firm: Albert Goodman
• Author: Mr Paul Holt

The government has introduced draft legislation proposing to increase the Normal Minimum Pension Age (NMPA) from 55 years to 57 years from 6 April 2028.

This followed an initial Consultation Document issued by the Treasury to the pensions industry.

The resulting published draft legislation raised several key factors for anyone wishing to make use of the NMPA at age 55. These are summarised in this article.

At the outset, we can establish that for those born before 6 April 1971, they will be able to continue to access their pension benefits at age 55. However, for those born after 5 April 1973, the earliest date from which pension benefits may be accessed, will move by two years to age 57.

For those born between 5 April 1971 and 5 April 1973, they may still have the prospect to draw pension benefits from their 55th birthday prior to 6 April 2028, the date from which the new NMPA becomes effective.

The draft legislation will also introduce a window that will give individuals an opportunity to join a pension scheme by 5 April 2023 where, if the scheme rules on 11 February 2021 already establish an unqualified right to take pension benefits before age 57, this will be upheld, allowing access to benefits from the lower age of 55.

The term unqualified right is where an individual has the option to draw benefits from age 55 without the requirement to have consent from any other person (such as an employer or trustee) before they take their pension benefits.

Pension members participating in a pension scheme which already has a right to access benefits at age 55 written into the rules, will have this protected even after the changes in 2028, whilst they remain in the scheme.

This will include the following:

• Certain occupational schemes such as the Armed Forces, Police and Fire Service.
• A protection regime will be introduced with effect from 11 February 2021 that will establish that a pension member of a registered UK pension scheme (occupational or non-occupational including private schemes) who had an unqualified right under the existing scheme rules at the date of the consultation, to take the pension benefits at an...