Members of pension schemes are not usually able to access their pension savings before the normal minimum pension age (NMPA).
The government is proposing to increase the NMPA from 55 to 57 with effect from 6 April 2028.
After this date the consultation said it might be possible for members protect the right to access pensions below the age of 57 (protected pension age or “PPA”) if:
· On 5 April 2023, the member had an unqualified actual or prospective right under the scheme to a benefit from an age less than 57;
· The scheme rules on 11 February 2021 included such a right for some or all of the members on that date; and
· The member had that right on 11 February 2021 or would have done had they been a member on that date.
HMRC is expected to issue guidance on what an unqualified right to draw benefit before age 57 means in practice. Broadly it would be a right under which individuals do not need the consent of any other person (such as an employer or trustee) before they can take their benefits at a particular age.
Note that in its response to the consultation, the Government is allowing a small window of opportunity for individuals to protect a pension age of 55. If an individual joins a pension scheme, by 5 April 2023, with rules that on 11 February 2021 already confer an unqualified right to take pension benefits below age 57, then that individual will also have the same PPA as other members in that scheme.
The legislation will be introduced in the Finance Bill 2021-22.