HM Revenue and Customs (HMRC) has today published fresh guidance clarifying how the forthcoming rise in the normal minimum pension age will affect savers when it comes into force on April 6, 2028.
The tax authority confirmed in its latest pension newsletter that the minimum age for accessing retirement funds will increase from 55 to 57 on that date.
Crucially, HMRC has committed to introducing transitional regulations designed to protect those who have already begun drawing their pension benefits.
However, the guidance indicates that affected individuals would face restrictions on crystallising any additional benefits between April 6, 2028 and their 57th birthday.
HMRC has issued a pension age update
| GETTYThose born on or before April 6, 1971 face no change, as they will have already turned 57 before the new rules take effect.
Savers born after 6 April 1971 but before April 6, 1973 find themselves in a transitional window, able to access their pension under current rules until April 5, 2028, but potentially required to wait until reaching 57 thereafter.
Andrew Tully, a technical director at Nucleus, said: "This is much needed clarification by HMRC but it feels like the minimum possible flexibility which could be offered."
He noted that while permitting those already receiving benefits to continue makes sense, many savers phase their pension access gradually over time.
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Number of pensioners affected if pension was means tested via house price | GBNMr Tully added: "This will mean that process will have to be paused and no further benefits can be crystallised until the individual reaches age 57, creating planning issues for some people."
He warned that some individuals may feel compelled to crystallise all their benefits before April 2028 simply to retain the flexibility to draw income when required.
Certain pension savers may retain the right to access their funds at 55 or 56 under protection rules.
To qualify, individuals must have had money invested in an occupational or personal pension by November 3, 2021, with scheme rules granting an unqualified right to earlier access that were established by February 11, 2021.
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| GETTYWhere these conditions are met, the protected age applies to all contributions, including future payments into the scheme.
However, analysts have warned that many pension schemes will not qualify.
Numerous pension arrangements used generic definitions referencing the normal minimum pension age rather than specifying age 55, meaning no protected right exists.
Other schemes, particularly occupational ones, require trustee approval for early access.