I’ve had some advice from my private pension provider, which said I was in the unusual position of being able to access my pension at 55 for a short period and then being denied access until I’m 57.
They said this was because I was born in a specific two-year window between 6 April 1971 and 5 April 1973.
I queried this with HM Revenue and Customs, but it said it ‘can’t comment on future events as legislation may change’.
What is the current legislation for people born between those dates?
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Birthday quirk: Our reader was told he may be able to get his pension at 55 because of when he was born – but HMRC could not confirm whether that was right
Steve Webb replies: The issue that you have raised could affect well over a million people who may find overnight that they have to wait up to two more years before they can access their pension pot.
It all relates to something called the ‘normal minimum pension age’.
HMRC takes the view that it gives you tax relief on your pension contributions only because you are locking the money up, and will only access it in retirement.
In light of this, there has to be a minimum age at which you can draw your workplace or personal pension.
When the normal minimum pension age (NMPA) was introduced in 2006 it was set at 50, but it was then raised to 55 in 2010.
It was set at 55 because that was ten years before the then-male state pension age of 65. Note. however, that some older pensions may retain access at an earlier age such as 50, and there are also certain exemptions for those who take pensions early because of ill health.
With the state pension age already raised to 66 for men and women, and plans in place to increase it to 67 by April 2028, the question then arose as to what this would mean for the NMPA.
On the basis that people will in future be working longer (and hence retiring later), the Government decided that the NMPA should also rise, from 55 to 57. This change does not apply to those in the uniformed public services such as firefighters, police and armed forces.
But whereas the state pension age increase from 66 to 67 happens gradually between April 2026 and April 2028, the rise in the NMPA will happen overnight on 6 April 2028.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
This creates a very odd situation for people born in a two-year window, of which you are one.
Suppose, for example, that you were born on 5 April 1973. In this case you will reach age 55 on 5 April 2028 and can therefore immediately access your pensions on your 55th birthday.
However, if you miss that day (perhaps because you are busy celebrating your birthday) you will wake up the next morning to find that you now cannot touch your pensions for another two years.
More generally, anyone born between 6th April 1971 and 5th April 1973 will find that they have a period when they can access their pension at 55, but this will then be switched off for a period of up to two years until they reach the age of 57.
HMRC’s view is that most pension scheme rules say that you can access your pension at NMPA, rather than a specific age. Given that NMPA can change, HMRC thinks that people will simply have to adjust to the new rules.
However, there is one concession in all of this, which is that if your pension scheme rules specifically say that you can access your pension at ‘age 55’ for example, rather than NMPA, then you will retain the right to access them at 55 – even when the normal age rises to 57.
This is called a ‘protected pension age’. It applies provided you were a member of the scheme before the cut-off date of 4 November 2021, and provided that this right to take a pension at 55 was included in the scheme rules as at 11 February 2021.
Of course, many people will not have a clue what the rules of their scheme say on this matter, and so they need to check where they stand if they think they might want to access their pension before the age of 57, but after 6 April 2028.
One final thing to bear in mind is to be careful if you are thinking of transferring your pension between now and then.
If you have a ‘protected’ pension age in your current pension, this can be retained if you transfer to a new pension. However, you need to make sure that your new pension provider is aware of this and has administrative systems set up to deal with it.
If your new provider is unaware of your protected pension age and simply sets up a new pension for you with an access age of 57, this cannot be undone. And in any case, all new contributions to that pension will have an access age of 57 rather than 55.
As you can see, this whole thing is a mess. It is a bit of a lottery as to whether your pension scheme rules referred to age 55 or NMPA.
But if your birth date falls within this two-year window, you need to be aware that the age at which you can access your pension will jump by two years after your 55th birthday, and to plan accordingly.
You can find a legally precise definition of the change in HMRC’s pensions tax manual.
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