Millions of individuals born in the early 1970s may have to wait an additional two years before accessing their private pension, due to upcoming rule changes. The normal minimum pension age (NMPA), which currently allows withdrawals from defined contribution pensions at age 55, is set to increase to 57 on April 6, 2028.
Who is affected?
The change specifically impacts those born between April 6, 1971, and April 5, 1973. If you turn 55 before the 2028 deadline, you have a limited window to access your pension early. After that, you may be locked out until age 57, meaning a potential two-year wait.
Key dates and options
According to PensionBee, a pensions app, affected savers can still take advantage of the current rules by accessing their pension between their 55th birthday and April 2028. This could involve withdrawing one or more lump sums, with the first 25% being tax-free up to a lump sum allowance of £268,275.
Maike Currie, vice president of personal finance at PensionBee, warned: “For some savers this could come as a nasty shock. Many people simply assume they will be able to access their pension at 55, not realising the rules are changing. There is a very specific cohort – those born between April 1971 and April 1973 – who face a potential cliff edge. Miss the deadline to access your pension before April 2028 and you could find yourself locked out of your savings for up to two more years.”
However, she cautioned against rushing to withdraw funds unnecessarily. “That does not mean people should rush to raid their pension. In many cases, leaving savings invested for longer may lead to a healthier retirement pot thanks to a few additional years of extra contributions and investment growth. But it does mean people should start planning now. For anyone hoping to retire early, bridge a gap between work and retirement, or phase down working hours in their mid-50s, understanding these dates could be crucial.”
Tax implications and scams
When taking a lump sum, 25% is usually tax-free, while the remaining 75% counts as taxable income. This could also affect eligibility for means-tested benefits. Additionally, savers are urged to beware of scams: MoneyHelper, a free service from the Money and Pensions Service, warns that unsolicited calls, texts, emails, or visits promising early pension access are likely fraudulent. Never share personal details or attempt to transfer funds in response to such offers, as you could lose your savings and face a large tax bill.
State pension age alignment
The increase in the NMPA coincides with the state pension age reaching 67 by 2028. The state pension age has already risen from 65 for men and 60 for women to 66 for both sexes in recent years.
