Pension UK: Minimum retirement age extension loophole discovered – how to 'lock in' at 55

Rishi Sunak grilled over plans for 8% pension rise

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Pension ages differ between private schemes and state pensions, as retirees can only claim the latter from the age of 66. For private plans, it is possible to access funds from the age of 55 but earlier this year, the Government announced plans to increase this to 57 over the coming years.

In February, the Government sought responses to a consultation on how to implement the normal pension age increase from 55 to 57 on April 6, 2028.

The state argued this would be needed in the face of longevity and changing expectations of how long people will remain in work and in retirement.

It was detailed raising the normal minimum pension age to 57 could encourage individuals to save longer for their retirement, and so help ensure families have financial security in later life.

Today, HM Treasury closed the consultation and released a summary of the responses it received.

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Pensions can be locked in at 55 (Image: GETTY)

The responses were wide ranging but they covered a number of areas such as how the overall framework should be considered, analysis of pension scheme rules and how members should be informed of the changes.

The Government went on to break down its planned next steps on the matter: “Raising the NMPA is necessary to reflect long-term demographic changes and reflects the changing expectations of how long people will remain in work and in retirement. The Government intends to publish draft legislation for a protection regime now and to legislate for this rise to 57 in the next Finance Bill.

“As appropriate, HMRC will provide further explanation and examples within its guidance for what is an unqualified right. The Government also acknowledges the importance of establishing a clear position on the transitional arrangements.

“For example, members who do not have a PPA and have reached age 55 but not age 57 by April 6, 2028 and for whom a transitional issue may arise. The Government will provide further advice on the proposed transitional arrangements and provisions in due course


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Canada Life examined the consultation and broke down what the new rules will mean going forward:

  • The normal minimum pension age will increase from 55 to 57 in 2028 (in line with the increase in state pension age to 67).
  • Members of “Uniformed pension schemes” including armed forces, police and fire services, will retain a normal minimum pension age of 55
  • An individual member of a registered pension scheme who on April 5, 2023 has a right to take benefits from an earlier age than 57 and the rules of the scheme on 11 February 2021 (the date of the original consultation) gave a right to take benefits at an earlier age, can retain the right to take benefits at age 55
  • That right to take benefits at an earlier age is retained on a ‘block transfer’ – broadly speaking a block transfer is where two or more people transfer from the same transferring scheme to the same destination scheme at the same time

Andrew Tully, a Technical Director at Canada Life, responded to the findings.

Mr Tully 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. “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.

“It is also disappointing to see a continuation of the existing ‘block transfer’ rules. These rules are complex and can effectively stop individuals transferring to a more modern, flexible, cheaper contract simply because they want to hang onto this right to take benefits at age 55.

“The legislation as drafted adds further hideous complexity to the pension system, which 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.”

State pension

Many retirees are dependant on state pensions (Image: EXPRESS)

Steve Webb, a partner at LCP and former Minister for Pensions, also examined the consultation and in doing so, uncovered an important potential loophole.

Mr Webb explained those who are already 57 will not be overly affected by the changes but the news will still be important to those who are “roughly” under 50.

Those who fall into this bracket may still be able to “lock in” their retirement ages at 55, as Mr Webb explained: “[HM Treasury] have announced today a potentially important loophole. “If you can find a scheme which had age 55 ‘written into the rules’ when they were published in February 2021, you can join it as long as you do so by April 2023!

“And the money you put in, plus subsequent savings, will all be accessible at age 55 even after 2028.

“For those who care about whether they can access their money at 55 or 57 after 2028 this is important. They should:

  • Find out whether the scheme they are already in has a baked in age of 55 or if it will rise to 57 in 2028;
  • Think about whether it might make sense to save somewhere else, and – subject to other considerations as well, like charges, investment performance, exit fees etc etc – potentially even transfer existing savings into ‘age 55’ schemes.”

Mr Webb concluded by providing guidance on where savers should start to lock in their pension ages: “We have known for some time that the government was planning to raise the standard minimum age for accessing a pension from 55 to 57. But today’s announcements provide a window for people to lock in to age 55 if they wish. Schemes which already have a right to access at 55 written into their rules will have this protected even after the 2028 change, and other savers may be able to join such schemes. As a first step, pension savers should find out where their own scheme stands. If their own scheme’s access age will rise to 57 they may wish to review where they hold their pension savings”.

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