HMRC clarifies rules on minimum pension age – what it means for clients

Do you have clients born between 6 April 1971 and 5 April 1973? Probably. In which case you will likely want to tell them they may see their retirement plans impacted by transitional rules set out by HMRC in its latest pension scheme newsletter.

The focus is the rise in normal minimum pension age – set to go up from 55 to 57 by April 2028.

When the normal minimum pension age was last increased in 2010 (from age 50 to 55), transitional arrangements were required to ensure affected members could continue to receive their benefits without interruption.  

Similar provisions will be necessary for the 2028 increase, the government has now said.

For example, someone who has already reached age 55 before 6 April 2028 may have met all the conditions to access a benefit before that date. However, after 6 April 2028, that same member may not be able to receive an authorised payment until they reach age 57.  

The aim of the transitional regulations is to ensure that people who have already become entitled to their pension benefits can continue to do so seamlessly.

Under the proposals, people who are aged between 55 and 57 by April 2028 – when the minimum access age rises to 57 – will be unable to enter new drawdown arrangements until their 57th birthday.

Those who have already entered drawdown before this date will be able to continue to access their taxable pension pot.

Anyone caught by the new rules needs to consider how they will plug any income gap created – especially those who have set up a plan to phase in their retirement income.  

AJ Bell has described the new rules as “effectively lobbing a grenade into the retirement plans of many people who will be aged 55 or 56 in April 2028 and are planning on accessing their pension savings early”.  

And we all know what that means – more work for advisers.  

If you’re wobbling under the weight of rejigging retirement plans, let us ease some of the burden. Our team of professional paraplanners know their way around a suitability report like the back of their hands.  

So you can spend more time talking clients through the ever-changing tides of government policy and what that means for their retirement (good luck!).

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