Pension alert as Britons forced to wait an extra two years to access cash
Financial expert explains how to get the most from your pension
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The Government is pressing forward with plans to make a monumental change to what is known as the Normal Minimum Pension Age (NMPA).This is the youngest age at which a person in a registered pension scheme can ordinarily expect to access their cash.
The NMPA was first introduced in 2006, where it was set at 50, however, it changed in April 2010, when it increased to its current level of 55 years of age.
However, Britons may now have to wait an extra two years for pension access under the current plans.
The increase to NMPA is due in 2028, where the age will increase to 57.
With people generally living longer, individuals are expected to spend a larger proportion of their lives in retirement.
This is one of the key influences for the pension access age increasing in the coming years.
Initially, the Government had proposed a protection regime which would enable people to keep an NMPA of 55 if they transferred to a qualifying scheme by April 2023.
However, this sparked concern within the industry about the complexity of the rules, as well as if individuals would be vulnerable to scammers.
At the time, Helen Morrisey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “The announcement that the transfer window for people to keep a NMPA of 55 has effectively closed means the Government has listened to industry concerns and blocked off one avenue for scammers who would have used the initial April 2023 deadline to exploit savers.
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“However, we must still be aware that scammers are still likely to try and use the situation to their advantage.
“There were also concerns people might be induced to transfer purely to keep a protected age of 55 rather than it being in their overall best interests, so the move is good news.”
However, recent research has shown some people are unaware altogether of the monumental change which could impact their access.
Some four out of five of people in their 40s asked said they were unaware the change was happening, according to the Pensions Management Institute (PMI).
The organisation said those looking to take their pension as soon as possible could be “shocked” to find out about the alteration.
Lesley Alexander, PMI president, described the results of the research as “worrying”.
He added: “This means it is vital that the general public understands clearly what their retirement choices are.
“With the pensions dashboard due to arrive in 2023 – giving people the chance to review all their pension savings in a single place – it will only cause confusion when people learn that they will become eligible to draw benefits at different ages.”
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Thankfully, if people are confused about their pension and access, there is help at hand.
The Government-backed service Pension Wise is designed to offer free and impartial guidance to Britons on their pension pot.
In addition, services such as MoneyHelper, and organisations including CitizensAdvice could assist individuals.
Some may choose to seek their own financial advice before making a decision on their pension cash.
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