The Normal Minimum Pension Age (NMPA) is the minimum age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge (unless they are retiring due to ill-health).
The NMPA was raised from age 50 to age 55 in 2010 and in 2014, the coalition Government announced that it would be appropriate for the NMPA to be increased again being set broadly at 10 years below state pension age.
On 11th February 2021 the Government finally released a consultation document which reconfirms the announcement that the NMPA will rise to 57 on 6 April 2028.
The following are the key points at this initial stage:
- Certain schemes such as the armed forces, police and fire services will not be affected by these increase proposals.
- A protection regime will be introduced with effect from 11th February 2021. Essentially, a member of any registered pension scheme (occupational or non-occupational) who has a right under the scheme rules at the date of this consultation to take pension benefits at an age below 57 will be protected from the increase in 2028.
- Anyone who meets the conditions for a protected pension age will have the protection applied to all the member’s benefits under the relevant scheme, not just those benefits built up before 2028.
- Anyone with an existing protected pension age will see no change in respect of their current protections.
- As is the position currently, an individual will be able to retain their protection as part of a transfer where they become a member of another pension scheme as a result of a ‘block transfer’.
- Schemes will be free to decide how and when to move to the new NMPA (age 57) by 2028. For example, some schemes might decide to increase the minimum age in their rules before 2028.
The Government has asked for comments on the consultation proposals and the specific questions raised by 22nd April 2021.
Once the responses to the consultation have been considered, the Government plans to publish draft legislation in summer 2021 and to legislate for the increase in normal minimum pension age in the subsequent Finance Bill.
To read the full Consultation paper please click on the following link: