Normal minimum pension age (NMPA) change from 55 to 57

• From 6 April 2028 the NMPA will rise overnight to age 57 from age 55. So, a client reaching age 55 on 5 April 2028 can take their benefits, but if they delay taking the benefits by a day they will have to wait until age 57.
• Clients with existing protected pension ages (PPA), (such as pre-A Day occupational pension scheme early retirement ages and those who kept the retirement age 50 in 2010 when it went up to 55) will not be affected by this latest age increase.

Protection regime

• The Government has announced there will be a new protection regime for the following pension scheme members, enabling them to maintain a pension age of 55:
  1) individuals who became members of registered pension schemes before 4^th November 2021, whose scheme rules on 11 February 2021 gave an ‘unqualified right’ for them to take their pension benefits earlier than age 57. ‘Unqualified’ means that the client can request benefits, and this does not have to be agreed by any other party, such as a trustee or scheme administrator. Transfers to such schemes that were in progress before the 4^th November 2021 will also be able to benefit from the receiving scheme’s PPA.
  2) All members of the armed forces, police and fire public service pension schemes would have PPAs even if their scheme rules did not confer a PPA on members as at 11 February 2021.
• Each scheme will need to determine whether their scheme meets the unqualified right. For clarity, Quilters Collective Retirement Account does not have an unqualified right within the scheme rules.

Transfers

• From 4th November 2021, an existing right to a PPA of 55 can be maintained on transfer between schemes on either a block or individual transfer basis.
• A block (buddy) transfer is where two or more people transfer all of their pension rights from the same pension scheme to the same new pension scheme, at the same time. Such a transfer will maintain the protection on the funds transferred and any new monies that are paid into the new scheme.
• Unlike the original block transfer rules set up in 2010, these new rules have no restrictions on the membership period of the receiving scheme – the 12-month ‘permitted membership period’ is not a requirement. They also do not require all the member’s rights to come into payment at the same time or place restrictions on the member’s re-employment after taking benefits.
• Individual transfers can be made by members, but this time at an individual arrangement level, so there is no requirement to transfer all of the arrangements held under a scheme. The transferred arrangement will be ring fenced in the new scheme and only those benefits will have a protected pension age. Other benefits in the scheme will not enjoy the protected pension age.

Pensions in payment before 6 April 2028

• If benefits are in payment for a client aged 55, they will not then have to stop on 6 April 2028 until the client reaches age 57 and can instead continue in payment.

Crystallising benefits

• Currently members who have a protected pension age of under 55 must crystallise all the benefits under the scheme at the same time. This requirement will not apply to the new PPA; instead members will be able to access any portion of their fund without losing their PPA.