Protected Pension Age – update
9th November, 2021
Protected Pension Age – update
Further to our recent newsletter on Protected Pension Age, the government has had a change of heart concerning its proposals for increasing the Minimum Pension Age from 55 to 57, effective in 2028 when the State Pension Age will be increased to 67 for all.
When publishing the Finance Bill 2021-22, the clause concerning the Minimum Pension Age was amended to remove the controversial window of opportunity for members to protect their existing Minimum Pension Age by transferring before 5 April 2023 from a scheme which did not provide the relevant right in its rules on 11 February 2021 to a scheme that did provide that right on that date and confers it on new members.
That window presented an incentive for members to urgently transfer from one scheme to another in the search for a safe haven for their right to take their pension earlier than otherwise possible without tax penalty. The pensions industry had raised the concern that such an incentive may give scammers a lure to entice victims into an improper transfer.
Hence, the government has slammed the window shut, to avoid some “unnecessary turbulence in the pensions market” and “some consumer detriment” (as stated in the relevant Treasury Update). Only individual transfers initiated but not completed before 4 November 2021 and certain bulk transfers in future will transfer the Minimum Pension Age applicable to the departing scheme to their benefits into the receiving scheme.
The scam risk may have been dealt with, but our previous comments concerning the complexities deriving from the rise in Minimum Pension Age still stand. This is something that will inevitably cause confusion for individual retirees, who may have different Protected Pension Ages in different pension arrangements in their portfolios – and potentially within a single arrangement if it has consolidated others. Planning for retirement will become arduous.
Trustees of pension schemes ought to at least check their rules regarding this issue (and employers should take an interest).
For more information or if you have any questions on the above please do not hesitate to contact Tristan Mander or a member of our expert Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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