Workers Could Face Two-Year Wait to Access Pension Savings Under Reform

The normal minimum pension age, which is the earliest age workers can usually access private pension savings, is scheduled to rise from 55 to 57 on 6 April 2028 under Finance Act 2022 measures. Workers turning 55 close to that date should plan around when they can draw down funds, take a tax-free lump sum or buy an annuity.

What the change actually does

Under section 218(3) of the Finance Act 2004 and the Finance Act 2022 amendments, the normal minimum pension age rises from 55 to 57 on 6 April 2028. Workers under 57 on that date will not be able to access most private pension savings until they reach 57.

Some occupational and personal pensions include a protected pension age clause that retains the right to access at 55. The protection has to be in the scheme rules on the relevant date and applies to the protected portion of the savings only.

Who is affected

Workers born after 5 April 1973 will reach 55 after the change takes effect on 6 April 2028. They will have to wait until 57 to access private pension savings unless they have a protected pension age in scheme rules.

Workers born before 6 April 1971 will reach 57 before the change takes effect and can access savings under the existing rules. Workers between those dates straddle the transition and should check scheme rules for protected pension age provisions.

What you can do at the minimum age

Once a worker reaches the normal minimum pension age, they can take a tax-free lump sum of up to 25 per cent of the pot, set up income drawdown, buy an annuity or combine these options under pension freedoms.

Income from drawdown or an annuity is taxable through PAYE. The first 25 per cent of each lump sum or full lump sum withdrawal can be tax-free, with the rest taxed at the worker's marginal rate.

State Pension is separate

The State Pension is unaffected by the change. State Pension age is currently 66 and is set to rise to 67 between April 2026 and April 2028 under the Pensions Act 2014.

State Pension is paid through the Department for Work and Pensions rather than through workplace or personal pension providers. Workers claim State Pension when they reach State Pension age through gov.uk's State Pension claim service.

How to check what applies to you

Each workplace or personal pension scheme can confirm the normal minimum pension age that applies to its members and whether a protected pension age exists. Scheme administrators provide this information on request.

The Money and Pensions Service offers free guidance through Pension Wise for anyone aged 50 or over with a defined contribution pension. Pension Wise appointments are free, last about an hour and cover the options at the minimum age.

FAQ

When can I access my pension savings?

The normal minimum pension age is currently 55. It rises to 57 on 6 April 2028 under the Finance Act 2022 amendments. Some schemes have a protected pension age that retains access at 55.

Does the change affect the State Pension?

No, the State Pension age is separate. It is currently 66 and rises to 67 between April 2026 and April 2028. State Pension is paid through the DWP rather than through private schemes.

What is a protected pension age?

A scheme clause that retains the right to access pension savings at 55 even after the normal minimum pension age rises. The protection has to be in scheme rules on the relevant date.

Where can I get free pension guidance?

Pension Wise, run by the Money and Pensions Service, provides free guidance for over-50s with defined contribution pensions. Appointments last about an hour and cover all the options at the minimum age.