State Pension age could be reviewed due to pandemic says expert
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Putting money away for retirement is a task which takes many years and a lot of discipline, as people prepare for their post-working life. However, changes are coming which will mean Britons have to wait longer to access their savings.
The normal minimum pension age (NMPA) dictates when people can draw from their private pensions.
It is the earliest age Britons can access their pension without being hit with tax charges.
The current NMPA is 55, where it has stood since being increased from 50 back in 2010.
The NMPA will increase up to 57 in 2028. It was first introduced in 2006, but many people are not aware of it.
The NMPA is different to the state pension age, which is the earliest age Britons can access their state pension entitlement.
The state pension age is currently 66 in the UK, and it is not possible to access the state pension before this time.
However, the two age thresholds are somewhat connected, as the decision to increase the NMPA to 57 was made to coincide with the state pension age going up to 67.
However, people should note that not everyone will be equally affected by the NMPA changes.
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This is due to the fact that some people will be able to retain an NMPA of 55.
People who were already part of a pension scheme which included a protected pension age of 55 as of November 4, 2021 will keep the lower age when the changes kick in.
Unfortunately, this means the deadline has already passed for people to take advantage of this opportunity to maintain a lower NMPA.
The Government had planned to allow anyone to secure an NMPA of 55 by transferring to a pension scheme which included this protection before April 5, 2023.
However, there were fears this would create more confusion and complications as people scrambled around to transfer schemes.
Even a child would have been allowed to enrol in a scheme which offered an NMPA of 55 and avoid making the jump to 57.
Therefore, the Government took the decision to bring the deadline forward and avoid any potential problems.
Many people are likely to be unsure whether they will have an NMPA of 55 or 57 when the changes come into effect, but they should be able to find out by contacting their pension provider.
It is important Britons are aware of their NMPA, as if they draw money before they are authorised to do so, they could face tax charges.
Something else to note is that while the NMPA is the earliest age people are allowed to access their private pensions, many people will not be able to retire at this age.
In fact, it is common for people to work beyond even the state pension age of 66 in order to fund their retirement.
The state pension is currently worth £9,339.20 per year, so it is likely that people will need considerably more if they want to live a comfortable life in retirement.
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