Pension age change needs clearer rules to prevent disruption for savers, TISA warns
TISA has called on HMRC to clarify how the increase in the Normal Minimum Pension Age (NMPA) from 55 to 57, will affect people already accessing their pension, warning that without changes to the draft rules some payments made after 6 April 2028 could risk being treated as unauthorised.
In its response to HMRC’s Normal Minimum Pension Age Transitional Provisions Regulations, TISA said the draft regulations broadly give pension schemes the detail they need to prepare but identified several areas where the transition needs to be clearer. These areas include people already receiving a pension through a drip-feed arrangement, those taking tax-free cash in instalments and people with a protected right to access their pension from age 55. TISA also warned that the change could prompt some 55 and 56-year-olds to access tax-free cash earlier than planned to avoid losing flexibility for up to two years.
Renny Biggins, Head of Policy: Products & Long-Term Savings at TISA, commented:
“Moving the minimum pension age from 55 to 57 should not significantly change most people’s retirement plans, but the transition needs to work properly for those already accessing their pension or who have made plans based on the current rules.
There are still situations where the draft regulations leave uncertainty. Someone could start receiving a pension or annuity before April 2028, for example, but still need clarity that those payments can continue while they are 55 or 56 after the new minimum age takes effect. Similar questions arise for people taking their tax-free cash in instalments or who have a protected right to access their pension from 55. Whilst legal opinion agrees that the protection cannot expire, there remains uncertainty about how this works in practice when transfers occur. For example, if a protection is lost on Transfer A because the receiving arrangement does not preserve it, but the member subsequently transfers to Arrangement B which honours this protection, should the transfer effectively regain that protection?
HMRC should resolve these points early so providers can give people clear information about what will happen to their pension. Government should support this with a public awareness campaign so people approaching retirement understand the change and have enough time to consider what it means for their plans.”
TISA also recommends that:
- The FCA considers how the change affects pension wake-up packs. These communications are currently linked to age 55, but the move to 57 alongside protected pension ages of 55 creates practical questions over when different customers should receive them.
- The Government considers increasing the age 75 pension threshold to 77. This would preserve the existing 20-year period between the normal minimum pension age and the age 75 threshold as the NMPA moves from 55 to 57.
ENDS.
Notes to editors
- A full copy of TISA’s response is available on request.
- HMRC’s Normal Minimum Pension Age Transitional Provisions Regulations consultation sets out draft transitional rules for the increase in the Normal Minimum Pension Age from 55 to 57 from 6 April 2028.The consultation closes 28th September.
- TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
- TISA has approximately 260 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.