Minimum private pension age: Big news for millions of British citizens. The minimum age for receiving private and workplace pensions will now be raised from 55 to 57. This change will come into effect from April 6, 2028, and is called the “general minimum pension age.” Although it differs from state pension rules, it will still impact millions of pensioners.
Pension age changes and exceptions
Most people could receive their private pension from the age of 55, but under the new rules, they will have to wait until 57. In the meantime, it will still be possible to access their pension earlier under certain circumstances. For example, those with a serious illness can access their pension earlier. Furthermore, some pension plans may have a protected pension age, meaning you can access your balance at age 55 or 56.
However, this rule does not apply equally to all pension plans. If you have more than one pension, your age protection isn’t necessarily guaranteed for each plan. Therefore, it’s crucial to carefully review the plan rules before withdrawing.
Pension Transfers Can Cause Disadvantages
If you’re considering transferring your pension plan to another provider, caution is essential. In many cases, doing so could void your age protection. Although some pension providers do, this isn’t universally applicable. People who held physically demanding jobs, such as athletes or police officers, may face a reduced pension age.
If you attempt to access your pension early, up to 55% tax may be applied to the amount withdrawn. Additionally, some providers may charge additional fees. Therefore, it’s crucial to be wary of fraudsters claiming they can help you access your pension early.
State Pension Age and New Rates
Unlike private pensions, your state pension withdrawal age is subject to separate rules. Currently, the minimum age for the State Pension is 66 for both men and women. However, it will be raised to 68 in the future by 2046.
A review released in 2017 also suggested that this age could be further raised to 2037 due to increased life expectancy. However, the Labour government has not clarified whether it will be raised to 68.
The current rate of the New State Pension is £230.30 per week, while the old Basic State Pension was £176.45 per week. If your National Insurance contributions are insufficient, you may receive less. 35 qualifying years are required to receive the full amount of the New Pension.
Who can claim the New State Pension?
The New State Pension can be claimed by men born on or after April 6, 1951, and women born on or after April 6, 1953. Meanwhile, men born before April 6, 1951, and women born before April 6, 1953, can claim the basic state pension.
The Need for Caution and Planning
This change will have the greatest impact on those who were planning to receive their pension early. If you’re considering transferring your pension plan, it’s crucial to fully understand the rules and make a timely decision. Making the wrong move could not only result in losing your age security but also lead to unexpected tax and fee burdens.
The decision to take a pension shouldn’t be based solely on current benefits. It’s best to activate it at the right time, taking into account your plan, age, tax rules, and future needs.