Pension warning as you may have to wait two more years to access cash | Personal Finance | Finance
A major pension change is occurring to what is known as the Normal Minimum Pension Age (NMPA). This is the youngest age at which a person in a pension scheme is able to access their cash, without incurring an unauthorised payments tax charge (unless they are retiring due to ill-health).
The NMPA is currently 55 years old, but changes will move this to 57 by 2028.
This is as a result of generally increasing life expectancy, and Britons spending more of their adult lives in retirement than ever before.
However, the changes have come under some scrutiny, particularly for the way they have been introduced.
Express.co.uk spoke exclusively to Andrew Tully, technical director at Canada Life, who unpacked the details.
READ MORE: Pension shock as Rishi Sunak’s 55% ‘penal’ tax to hit average earners
He continued: “This increase has been expected and confirmation of the details will 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.
“There are significant anomalies in the draft legislation that could mean for example the bizarre scenario that a child who is a member of a suitable pension scheme could be able to take benefits at age 55 in the 2070s. That is nonsensical.”
The nature of the introduction of this change has led to calls for it to be reconsidered.
While this has not yet been put into motion, several experts are examining the implications of the increase.
Mr Tully concluded: “The minimum pension age should either be moved to 57 for all, with very limited exceptions.
“Or the Government should retain age 55 and re-think its entire policy around minimum pension ages.”
Recent research suggested some individuals are unhappy with the way NMPA changes were communicated.
The Pensions Management Institute found 82 percent of those asked did not know about the upcoming increase, despite the fact they are most likely to be affected.
The study also found 78 percent of people in the 40-49 age group believed Department for Work and Pensions (DWP) should have communicated this change in policy more effectively.
A Treasury spokesperson told Express.co.uk: “We announced the change in the Normal Minimum Pension Age to 57 in 2014, 14 years in advance of the change to give people time to make financial plans.
“We are revolutionising how consumers keep track of their pension information by introducing pensions dashboards – a single online place for people to access via their digital device at any time, putting the saver more in control and transforming how they think and plan for their retirement.”
