Financial experts are warning that millions of pension savers could face a wait of up to two years to access their retirement funds due to a rule change taking effect in April 2028. The Normal Minimum Pension Age (NMPA) – the earliest age at which most people can access private pension savings without tax penalties – will rise from 55 to 57 on April 6, 2028.
Who Is Affected?
The change applies to private pensions, including workplace pensions and personal pension schemes. Those most significantly affected are individuals born between April 6, 1971 and April 5, 1973. This group will turn 55 during the two years before the rule change comes into force. They may still be able to access their pension at 55, but only if they take action before April 6, 2028. If they fail to access or 'crystallise' their pension before the deadline, they could face having to wait until age 57 to withdraw funds without incurring tax penalties.
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."
Breakdown of Impact
Under 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.
Evelyn Partners cautioned that the alterations could create difficulties for those planning to retire at 55 or those hoping to use pension withdrawals to bridge the gap before reaching State Pension age. Some savers may need to rely on ISAs, savings or investments to cover living costs if pension access is delayed.
Additional Retirement Shake-Up
This warning comes as pension savers face another major retirement shake-up from April 2027, when unspent funds in defined contribution pensions are expected to become subject to inheritance tax rules. Mr Smith noted that certain pension schemes may still offer a "protected pension age" allowing earlier access, but warned that savers risk losing these protections if they transfer their pensions without seeking professional 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."
Pension schemes for the armed forces, police and firefighters will remain unaffected by the changes, as they operate under separate arrangements. Further information regarding pension access ages and retirement planning is available on the GOV.UK website.
