HMRC, the tax authority under the Labour government, is introducing a pension access change for savers born between April 6, 1971 and April 5, 1973. Under the new rules, the minimum age to access private pension savings will rise from 55 to 57 in April 2028.
Details of the Change
Rachel Vahey, head of public policy at AJ Bell, commented: "We have known for many years that the minimum age people can access their private pension savings is going to increase to age 57 from April 2028. But it has taken five long years for HMRC to finally provide impacted pension savers with crucial details on how this change will affect their retirement planning."
She added: "People born after April 1973 have to wait until they reach 57 to access their pension savings. But this much-anticipated update from HMRC clarifies what the impact will be for those born between April 1971 and April 1973 – particularly those who intend to access their pension in the next few years."
Impact on Different Age Groups
Those born before April 6, 1971 can still access their pensions from age 55 under the changes. However, those born after April 5, 1973 must wait until they turn 57. Individuals born between April 6, 1971 and April 5, 1973 face strict limits if they have not already accessed their funds before the change takes effect.
Vahey further noted: "There's no doubt HMRC has chosen to take a harsh line... it is still effectively lobbing a grenade into the retirement plans of many people who will be aged 55 or 56 in April 2028 and are planning on accessing their pension savings early."
Government's Rationale
The Labour government's website explains: "This measure supports the government's fuller working lives agenda and has indirect benefits to the economy through increased labour market participation, while also helping to ensure pension savings provide for later life." The government has stated that the measure will be kept under review.
