Yahoo Finance UK government mulls raising minimum pension age to 57
The UK government has announced a consultation on its decision to up the normal minimum pension age (NMPA) from 55 to 57 from April 2028.
The move reflects increases in longevity and changing expectations of how long we will remain in work and in retirement, it said.
It added that it does not currently propose to automatically link the NMPA to 10 years below the state pension age, and that it has also proposed that individual pension schemes may wish to increase the minimum age to 57 sooner than 2028.
The normal minimum pension age is the minimum age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge (unless they are taking their pension due to ill-health).
The government confirmed there are no proposals to make any changes to the current pension tax rules on ill-health as part of this NMPA increase.
The consultation document said: “Raising the normal minimum pension age to age 57 could encourage individuals to save longer for their retirement, and so help ensure that individuals will have financial security in later life.”
The increase to age 57 will not apply to those who are members of the firefighters, police and armed forces public service pension schemes.
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Before April 2006 certain individuals who were members of approved occupational or personal pension schemes, or who had approved retirement annuity contracts, had a protected pension age of less than 50. In 2010 the NMPA was increased from age 50 to 55.
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Becky O’Connor, head of pensions and savings at Interactive Investor, said: “Moving the goal posts like this is likely to cause concern for those approaching retirement and make planning harder for them. It’s a curveball at a key life moment for those approaching 50 who will be hit by this.
“When it comes to retirement, there’s no such thing as ‘one size fits all’. People need some flexibility in when and how they access their pensions.”
She added: “The shifting of the minimum age for pension access underscores the benefits of using ISAs as well as pensions for retirement saving.”
In total, the government will spend around £100 billion on the state pension in 2020-21, and £124bn on overall benefits for pensioners in the same period.
The government is welcoming comments on the consultation by 11pm on 22 April 2021.
Once the responses to the consultation have been considered, the government plans to publish draft legislation in summer 2021 and to legislate for the increase in normal minimum pension age in the subsequent Finance Bill.
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