Can I get my private pension at age 55 because of this strange birth year quirk? STEVE WEBB responds

I received some advice from my private pension provider, who said that I was in the unusual position of being able to access my pension at age 55 for a short period and then being denied access until I was 57.

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

I asked HM Revenue and Customs about this but was told “I cannot comment on future events as legislation may change.”

What is the current legislation for people born between those dates?

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Steve Webb responds: The issue you have raised could affect more than a million people who, overnight, could be forced to wait up to two more years before being able to access their pension fund.

This all has to do with what is called the “normal minimum retirement age.”

HMRC considers that it is giving you tax relief on your pension contributions only because you are locking up the money and will only be able to access it in retirement.

In view of this, there must be a minimum age from which you can collect your employment or personal pension.

When the normal minimum retirement age (NMPA) was introduced in 2006, it was set at 50 years, but was later raised to 55 years in 2010.

It was set at 55 because that was ten years before the male state retirement age of 65. However, some older pensions may retain access at an earlier age, such as age 50, and there are also certain exemptions for those receiving pensions early due to health problems.

With the state retirement age already raised to 66 for men and women, and plans underway to increase it to 67 in April 2028, the question arose as to what this would mean for the NMPA.

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

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

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

Suppose, for example, that you were born on April 5, 1973. In this case you will turn 55 on April 5, 2028 and, therefore, you will be able to immediately access your pensions when you turn 55.

However, if you miss that day (perhaps because you’re busy celebrating your birthday), you’ll wake up the next morning to find that you won’t be able to touch your pensions for another two years.

More generally, anyone born between April 6, 1971 and April 5, 1973 will have a period in which they can access their pension at age 55, but will then be disconnected for a period of up to two years until who reaches the age of 55 years. 57.

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

However, there is a concession to all of this, which is that if your pension plan rules specifically say that you can access your pension at “age 55”, for example, rather than NMPA, then you will retain the right to access to them at 55 years old. – even when the normal age is 57 years.

This is called the “protected retirement age.” It applies as long as you were a member of the plan before the deadline of November 4, 2021, and as long as this right to receive a pension at age 55 was included in the rules of the plan as of February 11, 2021.

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

One last thing to keep in mind is to be careful if you are thinking about transferring your pension between now and then.

If you have a “protected” retirement age in your current pension, you will be able to keep it if you switch to a new pension. However, you need to make sure your new pension provider is aware of this and has administrative systems set up to deal with it.

If your new provider is unaware of your protected retirement age and simply sets up a new pension for you with an access age of 57, this cannot be undone. And in any case, all new contributions to that pension will have an access age of 57 years instead of 55.

As you can see, this is all a mess. It’s a bit of a lottery as to whether your pension plan rules refer to age 55 or NMPA.

But if your date of birth falls within this two-year period, you should be aware that the age at which you can access your pension will increase two years after you turn 55, and you should plan accordingly.

You can find a legally precise definition of change of HMRC Pension Tax Manual.