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A new normal minimum pension age (NMPA)
In 2014, following the consultation on ‘Freedom and Choice in Pensions’, the government announced it would increase the NMPA to from 55 to 57 in 2028 to coincide with the rise of State Pension age increase from 65 to 67. A decision was also made that the minimum pension age in the tax rules would remain ten years below State Pension age. This has been brought in to reflect people living longer and to encourage individuals to remain in work, to build sufficient savings for retirement.
The NMPA is the minimum age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge unless they’re retiring due to ill-health.
The government consulted on the implementation of the increase and a proposed framework of protections for pension savers who already have a right to take their pension at a pre-existing pension age on 11 February 2021.
Equalities impacts
This measure will impact men and women equally as the NMPA is the same for both genders. Whether individuals are affected will depend on the circumstances of their scheme.
This measure will impact individuals approaching retirement age who will be affected by the two-year increase in the NMPA, who do not have protections in place. This measure will have less of an impact on younger individuals who are more than 10+ years away, as they will have ample time to adjust and financially plan.
State Pension age change
Since 6 October 2020 the age that you can collect your State Pension has been age 66 for men and women. This is due to increase to:
- 67 between 2026 and 2028
- 68 between 2044 and 2046
In July 2017 the Government proposed that the change to age 68 be brought forward by seven years (i.e. between 2037 and 2039) but this hasn’t happened yet. You can obtain more specific information by using the State Pension age calculator at: www.gov.uk/state-pension-age.