HOW COULD THE NORMAL MINIUMN PENSION AGE CHANGE AFFECT YOUR PLANS?

In the ever-evolving landscape of retirement planning, a significant shift is on the horizon that could potentially impact when you can access your pension funds. The normal minimum pension age (NMPA), or the age at which you can start withdrawing from your pension savings, is currently set at 55.

There are a few exceptions to this rule — for instance, in cases of ill health or if you have a lower protected pension age. However, this standard generally applies across the board.

UPCOMING SHIFT IN NMPA

But from the 6 April 2028, the NMPA will rise to 57. Depending on your birth date, this shift could affect you in various ways. f your birthday falls after 5 April 1973, it’s advisable to reassess any pre-existing plans to see whether this change could impact them.

For instance, you might need to factor in an additional couple of years of saving, which could alter the retirement income available to you when the time comes. On the other hand, if you hadn’t planned on touching your pension savings until you turned 57, there’s no need for any immediate action.

REGULARLY REVIEW YOUR RETIREMENT PLANS

Although the change is still four years away, regularly reviewing your retirement plans is a beneficial habit to cultivate. This is especially true as you approach the age at which you wish to start withdrawing your pension savings.

BORN BETWEEN 6 APRIL 1971 AND 6 APRIL 1973?

If your birthday falls between these dates, you have two choices. Think carefully about which option best aligns with your circumstances.

ACCESS YOUR PENSION SAVINGS BEFORE THE WINDOW CLOSES

If you’d prefer not to wait until 57 to start withdrawing your pension savings, you’ll need to begin accessing your funds after you turn 55 but before 6 April 2028. Accessing your pension savings doesn’t necessarily mean withdrawing large or regular amounts. You have the freedom to determine the withdrawal size that suits your needs. However, seeking professional financial advice is crucial if you choose to access your savings during this window.

Also, remember that leaving your pension savings invested for longer could allow them to grow. Furthermore, for most people, withdrawing taxable money from your plan could reduce the amount you can contribute to your plan. This is known as the ‘money purchase annual allowance’.

WAIT UNTILYOU TURN 57

Alternatively, you can choose to wait. f you weren’t planning on accessing your pension savings before age 57, there’s no need for action. You can access your pension savings from age 57 onwards at a time that suits you. Just remember, if you don’t withdraw anything before 6 April 2028, you’ll lose the opportunity to access your pension before age 57.

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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.