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Article

57 is the new 55

Article

57 is the new 55

3 Mar 2022

2 minute read

Despite everything that has been happening over the last couple of years, I think most people are aware that the Government has put in place a gradual increase in the State Pension Age from 65 to 67 for those born after 1960, which is due to be completed by 2028. This is then due to be followed by an increase to 68 for those reaching that age between 2044 and 2046.

57 is the new 55 - news article image

Despite everything that has been happening over the last couple of years, I think most people are aware that the Government has put in place a gradual increase in the State Pension Age from 65 to 67 for those born after 1960, which is due to be completed by 2028. This is then due to be followed by an increase to 68 for those reaching that age between 2044 and 2046. 

What may not have been quite so clear is that this is due to be accompanied by an increase in the Normal Minimum Pension Age (“NMPA”) to 57 from 2028 also. With this there is no phasing in, just a straight change from 55 to 57 come 6th April 2028. 

The NMPA is the age at which you become able to draw on your pension without suffering a tax penalty. There are some exceptions to this for ill-health for example but in the main this is the key age for people to consider. For most people this won’t have any great impact as the majority of people who come to draw on their pensions to support then in their retirement do so after the age of 57 anyway. The biggest impact may well be on those who had planned on using a lump sum from their pension at age 55 to repay a debt or to fund capital spending. 

There is still the possibility that you may have a pension which provided a right to take benefits specifically at age 55 (rather than specifying the NMPA) and where the right to take those benefits were not subject to anything else such as trustee or employer consent. In this instance there is the possibility that you have a protected right to draw benefits at age 55 regardless of the increase in NMPA. 

As ever with this type of article, the conclusion is that you need to be aware of the fact that something is changing, check whether there is any reason why the change might not apply to you and review your planning to see if there are any changes which need to be made to the plan to compensate.

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