Retirement: Pension age changes coming which could impact retirement plans
The Retirement Podcast Cafe gives expert advice
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Britons hoping to draw from their personal pensions may soon face a longer wait to access their cash. Upcoming changes to the Normal Minimum Pension Age (NMPA) could force people to change their plans.
What is the NMPA?
The NMPA is the minimum age at which most pension savers can access their pensions.
Anyone who draws from their pension before their NMPA could incur an unauthorised payment tax charge.
However, someone may be able to draw money from their pension early if they are doing so due to ill health.
The NMPA is currently set at age 55.
Before the end of the decade, the NMPA will increase by two years.
It will rise from age 55 to 57 in April 2028.
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This follows the Government’s announcement in 2014 that the NMPA would rise.
The increase will be introduced to coincide with the rise of the state pension age.
In April 2028, the state pension age is scheduled to increase to age 67.
The NMPA was previously increased from age 50 to age 55 in 2010.
It was first introduced in 2006.
The Government states on its website that the increase supports their ‘fuller working lives’ agenda and has indirect benefits to the economy through increased labour market participation.
The hope is that this change will also help to ensure people’s pension savings provide for their later life and they do not draw their pension too early.
Who will be affected?
The Government states that “Individual members of registered pension schemes who do not have a protected pension age but take scheme benefits before age 57” will be impacted by the changes.
Those who would like to have taken a benefit but will now not be able to will also be affected by the changes.
Overall, people who had planned to draw from their pension in their 50’s, perhaps with a view to taking an early retirement, could be forced to wait an extra two years from April 2028.
Of course, there are many people who do not have enough of a retirement fund to retire early in any case, so they may not feel the effects of the changes.
However, members of the firefighters, police and armed forces public service schemes will not be included in the increase.
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