Lee Halpin, Head of Technical Services, @sipp
April 2028 will finally see the coalition government’s 2014 policy to align normal minimum pension age to 10 years below the new state pension age become reality when the earliest age pension benefits can be accessed increases to 57.
But you will probably not be surprised to hear that, as with most pension related matters, the detail is nuanced. Whilst it may not be an increase of 5 years, as it was in 2010, early communication of how affected client’s retirement plans make be affected will be key in setting clear expectations.
To this end, here’s 3 questions and answers aimed at clarifying some of the key detail.
Will anyone be able to continue to take benefits from age 55?
This will be possible where the individual had an ‘unqualified right’ to take benefits from age 55.
Whether or not an individual’s right under a scheme amounts to an ‘unqualified right’, will depend on how the specific scheme rules are drafted (as at 11 February 2021).
Where the rules expressly state that benefits can be drawn from 55, without the consent of any other person (such as an employer or trustee), this would amount to an ‘unqualified right’.
However, where the rules refer to the normal minimum pension age or its underlying legislation this would not amount to an ‘unqualified right’.
Members of the armed forces, police and fire service pensions schemes will also be protected from the increase to the normal minimum pension age.
There will also be a window until 5 April 2023 for individuals to join a scheme which gives an ‘unqualified right’ to take pension benefits before age 57.
But as it is not uncommon for SIPP and personal pension schemes to link the age benefits can be accessed to normal minimum pension age, instances of ‘unqualified rights’ are expected to be the exception rather than the norm.
Will those partially crystallised be able to continue to take their uncrystallised benefits from age 55?
Being partially crystallised alone, will not give the right to be able to continue to take benefits from age 55.
So for those that will not be protected from the changes as they do not have an ‘unqualified right’, it could be the case that there will be a window where they cannot vest again until they attain age 57.
However, it is worth noting that for those with an ‘unqualified right’ there will be no requirement to take all their benefits on the same day, which was a condition attached to previous protected pension ages.
Will an ‘unqualified right’ be lost on transfer?
In short, no. Where an individual has an ‘unqualified right’, the ability to continue to take benefits from age 55 will be retained when the individual transfers to a new scheme.
However, this will only apply to the transferred pension rights. Other rights that the individual accrues in the receiving scheme will not benefit from being protected from the increase to the normal minimum pension age.
Further information is available from: