HM Treasury and HMRC are consulting on the implementation of the increase to normal minimum pension age (NMPA) from 55 to 57 from 2028.  The consultation chiefly addresses how individuals with a right to early retirement under their scheme rules will be protected from the increase in NMPA.

Background

In July 2014 the government announced that NMPA would rise to 57 in 2028, to coincide with the rise in state pension age (SPA) to 67, and that it would seek to link future rises in NMPA to increases in SPA.

In the consultation just issued, the government confirms its position that, in principle, NMPA should remain around 10 years less than SPA, although it does not currently intend to link NMPA increases automatically to SPA.

Previous protected pension ages

Individuals who already have a right to draw benefits below the current NMPA of 55 will see no change in their current protection. 

Protection of existing scheme rights

• A member who has an unqualified right under their scheme rules as at 11 February 2021 to draw benefits at an age below 57, will be protected from the increase in NMPA.
• The 2028 protected pension age will apply only where the right to retire below age 57 is “unqualified”, that is it may be exercised without the consent of any other person (such as the employer or trustees).
• The 2028 protected pension age may apply to all types of registered pension scheme and will be specific to an individual as a member of a particular scheme.
• The protection will apply to all the member’s benefits under the particular scheme (so will not be limited to benefits accrued before 2028).
• Individuals entitled to a 2028 protected pension age may draw benefits from their scheme below age 57 while continuing to work in the same employment.  (This contrasts with the protection from the increase in NMPA from 50 to 55 in 2010, which applies only if the “retirement condition” is met – that is, that the member has actually retired before scheme benefits are paid.)
• Individuals with a 2028 protected pension age may draw benefits without having to crystallise all their benefits under the scheme on the same date. 
• The 2028 protected pension age will be retained where members are transferred to another scheme as part of a block transfer.
• Individuals eligible for protection will not need to apply for a 2028 protected pension age.

Carve out for armed forces, fire and police services

Some members of the armed forces, firefighters and police pension schemes already have a protected pension age permitting them to retire before the current NMPA of 55 and will be unaffected by the 2028 increase in NMPA.  

For members of these schemes who do not already have a protected pension age, NMPA will continue to be 55 and the increase to 57 will not apply. 

Key Dates

Consultation issued on 11 February 2021.  Consultation closes on 22 April 2021.

The government intends to publish draft legislation in summer 2021 and to legislate for the increase in NMPA in the subsequent Finance Bill.