People approaching their mid-50s are being warned about a major change to the age at which they can access their private pension. The Normal Minimum Pension Age (NMPA) is due to increase from 55 to 57 on April 6, 2028, affecting when many people can start taking money from their pension without facing additional tax charges.
Concerns over transition period
Pension experts are calling on HM Revenue and Customs (HMRC) to provide greater clarity over how the transition will work for people who are aged 55 or 56 when the new rules take effect. The Society of Pension Professionals (SPP) has warned that some people could potentially face unexpected tax consequences where they became entitled to a pension payment before April 6, 2028, but an administrative delay meant the money was not actually paid until after the new minimum age came into force.
It is calling for stronger transitional protections to prevent pension savers being penalised because of delays outside their control.
What the NMPA change means
The NMPA is the earliest age most people can normally access their workplace or personal pension without incurring additional tax charges. It is separate from the State Pension age, which determines when someone can start receiving their State Pension.
The minimum private pension age will increase by two years from April 6, 2028, although some people may have a protected pension age allowing them to continue accessing their savings earlier. The SPP raised particular concerns about people aged 55 or 56 around the date of the change.
Responding to an HMRC consultation on the transitional regulations, it has called for protection where someone's entitlement to a relevant lump sum arose before April 6 but payment was delayed until afterwards. It also wants greater clarity surrounding Uncrystallised Funds Pension Lump Sums (UFPLS) where a pension saver has completed the necessary steps to make a claim before the change but does not receive the money until afterwards.
Call for clarity and protected ages
The organisation warned that without clear and consistent rules, pension schemes and their members could potentially face significant unauthorised payment charges because of administrative circumstances outside their control. The SPP is also looking for confirmation that pensions already being paid before April 6, 2028 can continue uninterrupted after the minimum age rises.
It has asked HMRC to finalise the regulations quickly to give pension providers and administrators sufficient time to update their systems and explain the changes to customers.
Oliver Topping, chair of the SPP's Legislation Committee, said: "The increase in the Normal Minimum Pension Age is a significant change for members approaching retirement, and it is essential that the transitional arrangements are clear, consistent and workable in practice. Members should not face unexpected tax consequences simply because an administrative process crosses the 6 April 2028 boundary. We are urging HMRC to quickly finalise the Regulations and provide the clarity schemes need to protect members and communicate the new rules with confidence."
Not everyone will necessarily have to wait until 57 from April 2028. Some pension scheme members have a protected pension age under existing rules, which can allow them to access their pension before the normal minimum age. Different rules can also apply where benefits are being taken because of ill health. This means the precise position depends on the pension scheme and an individual's circumstances.
The SPP warned that uncertainty around the transition could result in people in their mid-to-late 50s making decisions about their retirement savings using incomplete information. Its intervention does not change the planned increase to 57. Instead, it is asking HMRC to ensure people caught around the April 2028 transition do not face unexpected tax consequences simply because processing their pension payment crosses the deadline.
