Can I get my private pension at age 55 because of this bizarre birth year oddity? STEVE WEBB replies

I received advice from my private pension provider stating that I was in the unusual position of being able to access my pension for a short period at 55, only to be denied access until I was 57.

They said this was because I was born in a specific two year window between April 6, 1971 and April 5, 1973.

I checked with HM Revenue and Customs, but they said it ‘cannot comment on future events as legislation may change’.

What is the current law for people born between these dates?

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Steve Webb replies: The issue you have raised could affect well over a million people, who will overnight find that they have to wait another two years before they can access their pension pot.

It all has to do with something called the ‘normal minimum retirement age’.

HMRC believes that it only gives you tax relief on your pension contributions because you are tying up the money, and only accessing it when you retire.

In light of this, there should be a minimum age at which you can receive your company pension or personal pension.

When the Normal Minimum Retirement Age (NMPA) was introduced in 2006, it was set at 50 years, but in 2010 it was increased to 55 years.

This has been set at 55 years, because that was ten years before the then state pension age of 65 for men. NB. However, some older pensions may continue to be accessed at younger ages, such as 50, and there are also certain exemptions for those who retire early due to ill health.

Now that the state pension age for men and women has already been increased to 66 years and there are plans to increase it to 67 years in April 2028, the question arose what this would mean for the NMPA.

Based on the fact that people will work longer in the future (and therefore retire later), the government has decided that the NMPA should also increase, from 55 to 57. This change does not apply to people in uniformed public services such as firefighters, police and armed forces.

But while the increase in the state pension age from 66 to 67 will take place gradually between April 2026 and April 2028, the increase in the NMPA will take place overnight, on April 6, 2028.

This creates a very strange situation for people born within a two-year period, of which you are one.

For example, suppose you were born on April 5, 1973. You will then turn 55 years old on April 5, 2028 and you can therefore immediately claim your pension on your 55th birthday.

However, if you miss that day (perhaps because you’re busy celebrating your birthday), you’ll wake up the next morning and find that you’re now out of retirement for another two years.

More generally, anyone born between April 6, 1971 and April 5, 1973 will find that they can access their pension at the age of 55, but this will then be disabled for a period of up to two years until they reach the age of 55. year reached. 57.

HMRC’s view is that most pension scheme rules say you can access your pension with NMPA, rather than a specific age. Given that NMPA may change, HMRC believes people will simply have to adapt to the new rules.

However, there is one concession to all this, which is that if your pension regulations specifically state that you can access your pension at age 55, for example, rather than the NMPA, you will retain the right to it at age 55 . – even if the normal age rises to 57 years.

This is called a ‘protected retirement age’. This applies provided that you were a participant in the scheme before the cut-off date of November 4, 2021 and that this right to a pension at the age of 55 was included in the scheme regulations as of February 11, 2021.

Of course, many people will have no idea what the rules of their scheme say about this, so they should check where they stand if they think they want to access their pension before the age of 57, but after April 6. 2028.

A final point of attention is that you must be careful if you want to transfer your pension in the meantime.

If you have a protected retirement age in your current pension, this can be maintained if you switch to a new pension. However, you must ensure that your new pension provider is aware of this and has set up administrative systems for this.

If your new provider is not aware of your protected retirement age and simply arranges a new pension for you with a starting age of 57, this cannot be reversed. And in any case, all new contributions to that pension will have a starting age of 57 years instead of 55 years.

As you can see, this whole thing is a mess. It is a bit of a lottery whether your pension regulations relate to age 55 or NMPA.

But if your date of birth falls within this two-year period, you should bear in mind that the age at which you can access your pension will increase by two years after your 55th birthday, and you should plan accordingly.

A legally precise definition of the change can be found in HMRC’s tax handbook for pensions.