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Adjusting your pension plans

How could the normal minimum pension age change affect your plans?

In the ever-evolving landscape of retirement planning, a significant shift is on the horizon that could potentially impact when you can access your pension funds. The normal minimum pension age (NMPA), or the age at which you can start withdrawing from your pension savings, is currently set at 55.

There are a few exceptions to this rule – for instance, in cases of ill health or if you have a lower protected pension age. However, this standard generally applies across the board.

Upcoming shift in NMPA

But from the 6 April 2028, the NMPA will rise to 57. Depending on your birth date, this shift could affect you in various ways. If your birthday falls after the 5 April 1973, it’s advisable to reassess any pre-existing plans to see whether this change could impact them.

For instance, you might need to factor in an additional couple of years of saving, which could alter the retirement income available to you when the time comes. On the other hand, if you hadn’t planned on touching your pension savings until you turned 57, there’s no need for any immediate action.

Regularly review your retirement plans

Although the change is still four years away, regularly reviewing your retirement plans is a beneficial habit to cultivate. This is especially true as you approach the age at which you wish to start withdrawing your pension savings.

Born between 6 April 1971 and 6 April 1973?

If your birthday falls between these dates, you have two choices. Think carefully about which option best aligns with your circumstances.

Access your pension savings before the window closes

If you’d prefer not to wait until 57 to start withdrawing your pension savings, you’ll need to begin accessing your funds after you turn 55 but before 6 April 2028. Accessing your pension savings doesn’t necessarily mean withdrawing large or regular amounts. You have the freedom to determine the withdrawal size that suits your needs. However, seeking professional financial advice is crucial if you choose to access your savings during this window.

Also, remember that leaving your pension savings invested for longer could allow them to grow. Furthermore, for most people, withdrawing taxable money from your plan could reduce the amount you can contribute to your plan. This is known as the ‘money purchase annual allowance’.

Wait until you turn 57

Alternatively, you can choose to wait. If you weren’t planning on accessing your pension savings before age 57, there’s no need for action. You can access your pension savings from age 57 onwards at a time that suits you. Just remember, if you don’t withdraw anything before 6 April 2028, you’ll lose the opportunity to access your pension before age 57.

Born on or before 6 April 1971?

If you were born on or before 6 April 1971, rest easy. The upcoming change won’t affect you or your retirement plans, as you’ll already be 57 by the time it takes effect.

Review your retirement date

Reviewing your retirement date is crucial if you’re on your journey towards retirement but haven’t reached the finish line yet. Surprisingly, your plan might still indicate your 55th birthday as the day of retirement, even if current regulations prevent you from accessing your funds at that age. This discrepancy could affect your financial plans, making examining and adjusting your retirement date critical.

It’s worth noting that your retirement date isn’t rigid. You’re free to alter it whenever you feel the need. However, the date you select can significantly impact your pension plan and, subsequently, your financial stability during retirement.

Influence of your retirement date on pension investments

If your retirement date is pegged at your 55th birthday, and you don’t plan to access your funds until you’re 65, there’s a clear misalignment between your investment strategy and your actual retirement plans. This discrepancy could affect your pension savings’ value when it’s time for withdrawal.

A mismatch between your retirement date and actual retirement plans can lead to unplanned financial outcomes. For instance, if your investments shift towards lower-risk areas prematurely due to an inaccurately set retirement date, you may miss out on potential growth in your pension pot’s value. Conversely, if your retirement date is later than when you plan to retire, your investments may remain in high-risk areas for too long, exposing your savings to unnecessary market volatility.

Want to discuss your retirement date and its impact on your retirement plans?

The reality is your retirement date matters. It’s more than just a day on the calendar; it’s a crucial factor affecting your financial future. So, don’t let an outdated or inaccurate retirement date throw off your investment strategy and jeopardise your hard-earned savings. Please contact us if you need more information or assistance adjusting your retirement date or understanding its impact on your pension plan.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

Adam Reeves

Author: Adam Reeves

DipPFS Cert CII (MP&ER)
Independent Financial Planner, Wealth Manager, Director

Last updated on

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Adam was quick to assess & understand my situation, and was able to discuss & communicate in a very concise and simple way the various options available to me, taking time for me to understand and clarify where necessary. My understanding & knowledge of taxation & pensions has increased significantly allowing me to feel much happier making financial decisions for the future.

Rob – West Sussex

Adam and his team undertook in-depth research into our existing QROPS schemes and clearly set out both pros and cons of transferring the funds back to the UK. Having decided to go ahead with the transfer, Adam and his team worked extremely hard to facilitate the transfer. The QROPS pension trustees were not always the most professional or responsive organisation – however we were very grateful for the perseverance and commitment that Adam showed us as clients.

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Adam offered a range of financial products , the one he suggested was affordable and proved to be a good choice.  Returns on investments have exceeded my expectations, based on Adam’s advice and guidance. Profits have enabled house improvements to take place.

David - Surrey

Adam arranged an appointment very timely, he explained his role and qualifications as an IFA giving me reassurance , we went through my retirement and investment goals. Adam discussed my options explaining in great detail, I felt relaxed during our discussions allowing me to fully understand my choices. I feel very confident in the financial advice allowing me to enjoy my retirement.

I was very happy with Adam’s recommendations and explanations of financial products which would suit my retirement goals, I feel this has helped me review and reduce my financial risk as I reach retirement, leaving me feeling confident that I can enjoy my retirement plans.

Ron – West Sussex

After initial meeting Adam put together a very detailed and thorough written plan. At our second meeting he went through the whole booklet and explained everything in layman’s terms which made it a lot easier to understand.

I am very happy with everything that was suggested and put in place especially with something as big and important as pensions. Adam and his team have taken a huge weight off my shoulders and I would highly recommend their services to anyone needing help with their financial planning and pension.  Adam couldn’t have been more helpful, and even came outside his normal area to meet me on a number of occasions.

Richard - Kent

Unfortunately I had to claim on my critical illness insurance due to my wife being ill and because of the sound advice Adam gave in acquiring this insurance we ended up being financially safe through a tough time.

Steve - Kent

Adam did a review of our financial situation, confirmed that Flexible Drawdown best suited our needs as a family, and then did all the research into the best product for us. He will continue to monitor it for me. He acted extremely promptly because we had a deadline for requiring the lump sum; went out of his way arranging meetings during non-office hours, was professional yet friendly and explained a difficult subject very well.

Clare – East Sussex

Adam did a thorough review of my pension policies, clearly explained how well they had performed, how flexible they were, how the market regulation has changed, and, crucially, what the tax implications would be if I were to leave them untouched. He accurately assessed my attitude to risk and recommended an up-to-date solution that will offer me the greatest flexibility at retirement.

Greg – East Sussex
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