17 February 2010
On and from 6 April 2010, the earliest age at which a member of a registered pension scheme (“scheme”) in the United Kingdom will be able to draw his or her pension will increase from 50 to 55. This age is known as the normal minimum pension age (“NMPA”). The change affects members of all types of schemes. There are two exceptions to the new NMPA.
The first exception covers members of schemes who become seriously ill and are eligible to receive an ill-health pension. These members will still be able to receive early payment of their pensions after 6 April 2010, whether they have reached the NMPA or not.
The second exception involves members with a protected lower retirement age. They have a “protected pension” which means they had an “unqualified right” (including a prospective right) at 5 April 2006 to take their pensions between the ages of 50 and 55.
An 'unqualified right' under the rules of the scheme must allow a member to apply for and draw benefits without the need for the employer's or trustees’ consent. The right is subject to a number of other restrictions involving, for example, the amount of pension taken and whether a transfer has precluded the application of the right.
The rise in the retirement age was put forward by the Government as part of a package of measures to encourage people to work longer. The legislation making the change is contained in the Finance Act 2004.
It should be noted that if a member is aged between 50 and 55 and is already receiving pension payments, the change to the NMPA will not affect those payments.
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