Pension warning: Rule changes mean Britons must wait longer to access hard-earned funds

The Retirement Podcast Cafe gives expert advice

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There are restrictions placed on when Britons can access their personal pensions. The Normal Minimum Pension Age (NMPA) is responsible for deciding when someone can draw from their retirement fund.

The NMPA is completely separate from the state pension age, which dictates when people can begin getting their state pension.

Currently, the NMPA stands at 55.

Registered pension schemes must not normally pay any amounts to their members from their pension pots until they reach their NMPA.

They are also not allowed to have a normal pension age lower than age 55.

People need to be aware of the NMPA, as failing to take heed of it could lead to a financial penalty.

If a registered pension scheme allows a member to access their pension before the NMPA, an unauthorised payment charge may be levied against the individual.

There may be an exception if amounts are drawn based on ill-health grounds.

The NMPA is set to rise in the coming years, which could mean someone having to wait an extra two years to access their funds.

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From April 6, 2028, the NMPA will increase to age 57.

This is designed to fall in line with the next state pension age increase.

The state pension is currently 66, but will rise to 67 by 2028.

The upcoming NMPA increase could impact those approaching retirement age or who were planning on retiring before their state pension age.

Some people may have a protected pension age depending on their scheme.

Anyone who had a protected pension age of 55 before November 4, 2021 should have a right to still access their fund at that age.

Members of the firefighters, police and armed forces have a protected pension age and will therefore not be affected.

The Government states that the increase supports its “fuller working lives” agenda and has indirect benefits to the economy through “increased labour market participation”.

The increase is also designed to help ensure people’s pension savings provide for later life.

The NMPA was introduced in 2006.

It was originally set at age 50.

The previous NMPA increase took it from age 50 to age 55 in 2010.

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