Pension alert as Britons set to wait until 57 to access cash – ‘hideously complex’

Guy Opperman discusses the ‘priority’ for pension trustees

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The normal minimum pension age increase is due to take effect from April 2028 as a single-step change, impacting many people. At present, Britons are able to access their pension at 55 under freedoms rules which allow them to manage their retirement cash. At this age, they will not have to incur any further tax charges related to an “unauthorised payment”.

The increase will be in line with that of the state pension age, which is set to rise to 67 at a similar time.

However, there are also other aspects of the draft legislation which are worth bearing in mind.

An individual member of a registered pension scheme who on April 5, 2023 has a right to take benefits earlier than 57, and the rules of the scheme on February 11, 2021, gave a right to take benefits at an earlier age, can retain the right to take benefits at age 55.

This right to take benefits at an earlier age is retained on a “block transfer”.

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Pension warning as Britons set to wait until 57 to access cash – ‘hideously complex’ (Image: Getty)

This is when two or more people transfer from the same transferring scheme to the same destination at the same time. 

The national minimum pension age was first introduced in 2006 and increased from age 50 to 55 in 2010.

However there are concerns about how the changes will impact Britons going forward. 

Andrew Tully, Technical Director at Canada Life, commented on the matter.


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He said: “The confirmation of the timing of the increase in the normal minimum pension age will be welcome to individuals and advisers and give time for appropriate planning over the next seven years.

“However, what should have been a simple process has turned into a hugely complex mess.

“The process to decide which individuals retain a right to an earlier pension age is completely arbitrary, being based on the specific wording within scheme rules, which may have been written many years ago.

“It also leaves open the possibility that people will hunt around for a scheme which gives them the right to take benefits at age 55 and transfer to that before 2023. 

pension saving UK 2021

Pension: Monthly sum needed for a £100k pot (Image: EXPRESS)

“So expect frantic transfer activity over the next few years as people look to secure age 55 as their minimum pension age, irrespective of their birth date.”

Mr Tully also expressed disappointment at the continuation of existing “block transfer” rules currently in place.

These rules are considered by some to be complex, and preventative when it comes to switching to a new contract.

Mr Tully stated these new arrangements can often be more flexible, modern and even cheaper.

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But people are hanging on to the idea of taking their benefits at age 55 and so may not switch.

He concluded: “The legislation as drafted adds further hideous complexity to the pension system.

“That might be fine for pension geeks like me, but for the average pension saver will prove nigh on impossible to navigate successfully without the help of a professional adviser.”

William Murphy

William Murphy

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