HMRC has confirmed that the normal minimum pension age (NMPA) in the UK will increase from 55 to 57 on April 6, 2028. This change primarily affects individuals born after April 1973, who must wait until they reach 57 to access their private pension savings. However, transitional rules apply to those born between April 6, 1971, and April 5, 1973, who may see their retirement plans impacted.
Transitional Rules for Those Aged 55 or 56 in April 2028
HMRC stated: "Changes to the normal minimum pension age can affect the continuation of certain pension benefit payments. When the normal minimum pension age was last increased in 2010 (from age 50 to 55), transitional arrangements were required to ensure affected members could continue to receive their benefits without interruption. Similar provisions will be necessary for the 2028 increase."
The transitional provisions apply only to members who have reached age 55 on or before April 5, 2028. For example, a member who has already reached age 55 before April 6, 2028, may have met all conditions to access a benefit before that date. However, after April 6, 2028, that same member may not be able to receive an authorized payment until they reach age 57.
Impact on Retirement Income and Drawdown
Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown, commented: "Making sure your pension planning is as robust as possible will also help you navigate any changes to state pension age. State Pension age will hit age 67 in 2028, and there's also an ongoing review that could see further changes."
Rachel Vahey, head of public policy at AJ Bell, added: "We have known for many years that the minimum age individuals can access their private pension savings is going to increase to age 57 from April 2028. But it has taken five long years for HMRC to finally provide impacted pension savers with crucial details on how this change will affect their retirement planning."
Vahey explained that those born between April 6, 1971, and April 5, 1973, who have already moved funds into drawdown can continue to take an income. Similarly, those receiving an annuity or a defined benefit pension can continue. However, they will not be allowed to move any new money into drawdown funds from April 6, 2028, even if they have previously accessed their pension, taken tax-free cash, and moved funds into drawdown. They also cannot set up a new annuity or start taking a pension from a defined benefit scheme until they reach age 57.
Disruption to Retirement Plans
Vahey noted: "This will disrupt some pension savers' pension plans, putting a stop to those taking regular ad-hoc lump sums or in phased drawdown. It will also encourage more people within this group to fully access all their pension funds from an earlier age rather than adopt a more measured phased approach."
The NMPA increase aligns with the state pension age rising to 67 in 2028. Morrissey highlighted that the government may consider further increases, such as moving the state pension age to 68 or beyond, to manage costs as life expectancy rises.
