At present an individual can normally access their money purchase/defined contribution pension funds from age 55, other than due to ill health or where they have a protected right to access the funds before reaching that age.
In 2014 the Chancellor announced that the Government intended to increase the minimum age for accessing pension funds to 57 from 2028, to keep it 10 years before the State Pension Age, which is to increase to 67 in that year. This change has not so far been included in any legislation.
However, on 3rd September 2020 John Glen, the Economic Secretary to the Treasury and City Minister, confirmed that the Government still intends to go ahead with the increase. In an answer to a Parliamentary question asked by Stephen Timms MP, he stated that:
“In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life.
“That announcement set out the timetable for this change well in advance to enable people to make financial plans and will be legislated for in due course.”
This increase will affect anyone who will reach their 55th birthday from 2028 onwards, and who intends to access their funds as soon as possible. This could for example include people who wished to retire early, or who simply intended to draw their tax-free lump sum to pay off their mortgage or other debts. Such individuals should consider what effect this will have on their plans, as they may find that they need to work longer, or to make alternative arrangements.