What is a Protected Minimum Pension Age?

In this update, we take a closer look at the Government’s forthcoming changes to the normal minimum pension age and what the introduction of a Protected Minimum Pension Age could mean in practice for family lawyers and their clients.

The Government is increasing the ‘normal minimum pension age’ from age 55 to 57 with effect from 6 April 2028.

The change will affect most people born after March 1973, although public sector schemes for Firefighters, Police and the Armed Forces will not be affected by the change for active members.

It was intended that the normal minimum pension age is to be then linked to increases in the State Pension Age – e.g. when the State Pension age increases to 68 then the ‘normal minimum pension age’ will increase to 58. However, with the latest speculation that the State pension age may need to be increased into the age 70’s or even age 80 for people now leaving school for the state pension to remain affordable then this link may possibly be broken!

It is called the ‘normal minimum pension age’ because for some individuals they may have a ‘Protected Minimum Pension Age’.

What is a Protected Minimum Pension Age?

There are two types of protected pension age:

1. A protected pension age of less than 55
2. A protected pension age of 55 or 56. This will apply when the NMPA increases to 57 on 6 April 2028

Protected Minimum Pension Age of below age 55

Individuals who were members of an occupational pension scheme or Section 32 Buyout Plan prior to 6 April 2006 (A-Day) could have a Protected Normal Minimum Pension Age if they; –

• who were members of an occupational pension scheme or Section 32 Buyout Plan prior to 6 April 2006 (A-Day) and had an ‘unqualified’ right to take their retirement benefits before age 55, or
• were a member of a scheme which had a pension age below age 50 due to the member having a special occupation, such as in a dangerous occupation or a professional sportsperson – Footballers was age 35. But ITN newscasters also had a protected pension age so those of us of a certain age may not be sure what Sir Trevor did to get that!

Protected Minimum Pension Age of 55 or 56

When the new normal minimum pension age comes into force, an individual might qualify for a protected pension age of 55 or 56, depending on the details of their pension scheme.

If they do qualify, the protected pension age will most likely be 55, which means that the individual will need to be 55 or older to start taking money from their pension.

An individual will have this type of protected pension age if all of the following apply:

• They had money invested in a pension scheme (an occupational or a personal pension) on 3 November 2021
• The rules of that pension scheme gave them an unqualified right to take their pension savings from an earlier age than 57
• Those rules were in place on 11 February 2021

Whilst this might already sound complicated enough, the rules are actually more detailed. The rule of thumb is that in most cases, if accessing funds as soon as possible to assist with a financial settlement is required, you will need to ask the pension scheme provider or pension scheme trustees. We know already that Aviva have a range of personal pension plans that may carry a protected minimum pension age.

As with all our technical updates, these notes are intended to raise awareness of issues that family lawyers may not already be familiar with. They are provided for professional use only, and should not be taken as advice for retail clients. Our role is to support you with the expertise and implementation needed to assist you and your clients with financial planning matters.