The UK Government has recently put plans on hold to increase the state pension age from 65 to 68 in the next decade – which will be welcome news for many. However, the plan still remains to increase the minimum age at which you can begin to draw down on a private pension. This will be increasing from 55 to 57, on 6 April 2028.
What does this mean for me?
If you will be reaching the age of 55 before 6 April 2028, you will be able to begin drawing on your private pension. However, if you reach 55 after that date, you’ll have to wait another two years until you are 57 before you can access those funds.
If you have reached the age of 55 before that date, but not the age of 57, you may be prevented from drawing any further benefits until you do reach 57.
Both of these scenarios may be prevented if you have a Protected Pension Age (PPA) in your scheme(s), or if your scheme was in the process of a substantive or “block” transfer to a different scheme on 4 November 2021, which is when the legislation was put out for consultation.
This change doesn’t apply to members of public service pension schemes – usually received by police officers, firefighters and armed forces.
Is there any way I can access that money before 57?
If you have a PPA in your pension scheme, you do have the right to your pension benefits before age 57. The intention of these is to safeguard the retirement and drawdown expectations of people nearest to that previous qualifying age of 55.
PPAs are applied on a scheme-by-scheme basis, and it could be that you have a PPA under one pension scheme, but not under another one. It’s also possible that your protected pension age could vary between your schemes.
A protected pension age applies on a scheme-by-scheme basis. You may have a protected pension age under one scheme, but not under another – and you could have different protected pension ages under different pension schemes too. However, you must:
- Have joined a registered pension scheme before 4 November 2021 to take a pension, lump sum, or both before you reached 57;
- Have had an unqualified right to do so – meaning that you don’t need consent from anyone to take your benefits.
There are some other situations, including transfers of schemes to a different provider, that might qualify you to access your pension fund before 57. You should check the exact status of your PPA with your pension provider.
What if I don’t have a PPA?
A number of people will be directly affected by the change in the private pension age if they don’t have a PPA. It depends largely on when you were born:
- If you were born before 7 April 1971, you will be 57 by 6 April 2028. This means you won’t be affected by the change, and it doesn’t matter if you’ve taken all, part, or none of your benefits by then.
- If you were born between 7 April 1971 and 5 April 1973, you could be affected if you haven’t taken all your benefits before 6 April 2028. This means that from 6 April 2028, you will need to wait until you are 57 on 5 April 2030 before you can draw your benefits again. his is most likely to affect people who have chosen to take their pension benefits in stages or with a drip-feed drawdown.
- If you were born on or after 6 April 1973, you will have a minimum pension age of 57 and you will not be able to take any benefits until you reach the age of 57.
What can I do if I’m affected?
If you think you might be in the second group, and are concerned that you do not have the right PPA on your scheme or schemes, speaking to a financial advisor is vital to confirm your position and start planning the continuity of your finances when the change comes into effect in April 2028.
NB: The value of pensions and investments, and any income from them, can fall and you may get back less than you invested.