Pension access age rise to 57 in 2028 creates two-year wait for some savers
Millions of pension savers are being warned to check when they will be able to access their retirement savings ahead of major rule changes coming into force in April 2028. The Normal Minimum Pension Age (NMPA), which is the earliest age most people can access private pension savings without facing tax penalties, is set to rise from 55 to 57 on April 6, 2028.
While the change will not affect everyone, financial experts are warning there is a “middle group” of savers who could unknowingly face a gap of up to two years before they can access their pension money. The change affects private pensions including workplace pensions and personal pension schemes.
Who is affected by the NMPA increase?
Under current rules, most people can begin accessing private pension savings from age 55. However, from April 2028, the minimum access age will increase to 57 for most savers as part of wider efforts to reflect longer life expectancy and changes to the State Pension age.
The most important group affected are people born between April 6, 1971 and April 5, 1973. These savers will turn 55 during the two years before the rule change takes effect. People in this age group may still be able to access pension savings at 55, but only if they take action before April 6, 2028. If they do not access or ‘crystallise’ their pension before the deadline, they may then have to wait until age 57 before being able to withdraw money without tax penalties.
Expert warns of 'cliff edge' for unsuspecting savers
Gary Smith, Partner in Financial Planning at wealth management firm Evelyn Partners, said: “This seemingly straightforward rule change could catch out thousands of unsuspecting pension savers. Many face a cliff edge, where their ability to access their pension is suddenly put back for up to two years.” He added: “All savers in their early fifties need to be aware of how their age might mean they need to rethink retirement plans because their access to pension funds is either compromised or delayed.”
Breakdown of the proposed rules
- People born on or before April 5, 1971 are unaffected and can still access pensions from age 55.
- People born between April 6, 1971 and April 5, 1973 may need to act before April 2028 to avoid delays.
- People born after April 5, 1973 will normally need to wait until age 57 to access pension savings.
Impact on retirement planning and other changes
Evelyn Partners said the changes could create problems for people planning to retire at 55 or those intending to use pension withdrawals to bridge the gap before State Pension age. Some savers may need to rely on ISAs, savings or investments to cover living costs if pension access is delayed.
The warning also comes as pension savers face another major retirement change from April next year when unused money in defined contribution pensions is expected to become subject to inheritance tax rules. Mr Smith said some pension schemes may still offer a “protected pension age” allowing earlier access, but warned savers could lose these protections if they transfer pensions without taking advice. He added: “Some retirees look to take withdrawals from their pensions using flexible options over several years because of the tax advantages this can offer. However, after April 2028 some people could find they are unable to access additional pension funds until they turn 57.”
The changes will not affect the armed forces, police and firefighters pension schemes, which have separate arrangements.
