Retirement warning: Britons may face penalty when drawing pension and rules are changing

The Retirement Podcast Cafe gives expert advice

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People are not free to draw their pension whenever they want; there are restrictions placed on when savers can access their funds. The Normal Minimum Pension Age (NMPA) is the main instrument through which pension access is moderated.

What is the Normal Minimum Pension Age (NMPA)?

The NMPA is the earliest age that Britons can draw from their retirement fund.

It is in place to prevent people from accessing their pot too soon and therefore running out of money in retirement.

Britons could face an unauthorised payment tax charge if they withdraw money from their pension before reaching their NMPA.

The only exception to this is if they are doing so due to ill health.

It is therefore worth being aware of the presence of the NMPA and what each individual’s NMPA is.

What is the NMPA set at?

The NMPA is set at age 55, making this the earliest age someone can access their pension pot.

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However, changes are coming which will increase the NMPA.

In April 2028, the NMPA will rise from age 55 to 57.

This means people wishing to access their private pension will have to wait an extra two years.

The aim of changes to the NMPA is to help ensure people’s retirement savings are capable of providing for their entire retirement, which can be more difficult as life expectancy increases.

People who planned on retiring early could therefore see their plans impacted.

Many Britons cannot afford to retire early, so they may not feel the effects of the NMPA increase.

Firefighters, members of the police and members of the armed forces will not be impacted by the increase to age 57, as their pension age is protected.

The Government announced the change to the NMPA back in 2014.

It will coincide with the next increase to the state pension age.

The state pension age is set to rise to age 67 by April 2028.

The NMPA was first introduced in 2006 and set at age 50.

It was then increased from to age 55 in 2010.

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