Brits WON’T be able to access pensions until 57 as government closes loophole
MOST Brits will now have to wait until they reach 57 to access their pension under new rules.
The government has said it has closed a loophole that would have given some Brits the cash earlier by transferring their pension.
Now most Brits will see the age for getting their pension rise from 55 to 57.
The hike to the normal minimum pension age (NMPA) will apply to personal and workplace pensions from 2028.
It won't apply to the state pension which has a different age you can claim and will also rise in a few years, but under separate plans.
A quirk of pensions rules meant that the planned increase to the pension age could be avoided by moving a pension to a different provider.
The small print of pensions state that people can access their pension when they reach NMPA, But some pension terms say a specific age of 55.
Anyone with access at 55 written into their rules won't be affected by the age change.
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But the quirk meant people could transfer their nest egg from a scheme stating NMPA to one stating age 55 if they did it by April 2023 to get earlier access after the hike.
Now, the government has closed this loophole by moving the deadline for such transfers to today (November 4).
John Glen, economic secretary to the Treasury said: "On this occasion, giving prior notice of the shorter window ahead of its closure on November 3, 2021 could have led to unnecessary turbulence in the pensions market and led to some consumer detriment.
“Some pension savers could find themselves with poorer outcomes (or even be the victim of a pension scam) if they were rushed by rogue advisors to make a quick transfer in the short time period before the window closed.”
The move to close the transfer loophole comes after the pensions industry warned that it could lead to people losing their cash.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “The announcement that the transfer window for people to keep a NMPA of 55 has effectively closed means the government has listened to industry concerns and blocked off one avenue for scammers who would have used the initial April 2023 deadline to exploit savers."
She said that there were also concerns people might be tempted to transfer their pension purely to keep a protected age of 55 rather than it being in their overall best interests.
Tom Selby, head of retirement at AJ Bell, said: “It will mean fewer people make decisions about their retirement pot based purely on the minimum access age when in reality other factors such as costs and charges are usually far more important in delivering long-term value."
However he said that the different access ages will still create confusion.
"We are left with the ludicrous situation that those people who are today in a scheme with a protected pension age and later transfer might end up in a scheme with two different minimum pension access ages.
Ms Morrissey also warned that some scammers were still likely to take advantage of the age change.
Meanwhile over a million workers on low incomes will get £53 a year from a pensions tax boost after a different loophole was closed.
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