Change to NMPA in April 2028 - how will it affect me?
Discussion
I'm trying to figure out how the change to Normal Minimum Pension Age (NMPA) that is legislated to come into effect on 6th April 2028 will affect me.
Currently the NMPA is 55, but this will change in April 2028 to 57.
I fall into the birth cohort of people who will turn 55 before that date, and therefore I could start accessing my DC pensions - but I will still be under 57 in April 2028. (In fact I'd only be 55 and a bit, so potentially a significant gap before I hit 57).
When I last looked into this, I thought I'd figured out that I couldn't continue accessing my pension after April 2028, so I've been assuming that I can't practically access my DC pensions until at least 57, and possibly 58. But a few days ago I asked ChatGPT and it said I can continue to access my pensions provided I crystallise at least a small slice of pension before the NMPA change - even just £1,000. It said this will "lock in" my access.
I'm not 100% convinced this is correct.
I found this page: https://atsipp.co.uk/customer-support/pension-chan...
Under the question "Will this affect individuals drawing benefits from drawdown funds (that were crystallised prior to 6 April 2028)?" it says "No - you can continue to draw benefits from your drawdown fund".
But I note that this is talking about drawdown funds that were already crystallised before April 2028. So am I correct in thinking that ChatGPT's strategy of crystallising a tiny bit on my 55th birthday won't work, because I would then be unable to crystallise further funds after the NMPA change, until I'm 57?
If I want to access my pension before 57, would I need to crystallise enough to last me until my 57th birthday, and do this before April 2028?
Or is ChatGPT actually correct, and crystallising a small amount on my 55th birthday "locks in" my ability to crystallise further funds regardless of the NMPA change?
Currently the NMPA is 55, but this will change in April 2028 to 57.
I fall into the birth cohort of people who will turn 55 before that date, and therefore I could start accessing my DC pensions - but I will still be under 57 in April 2028. (In fact I'd only be 55 and a bit, so potentially a significant gap before I hit 57).
When I last looked into this, I thought I'd figured out that I couldn't continue accessing my pension after April 2028, so I've been assuming that I can't practically access my DC pensions until at least 57, and possibly 58. But a few days ago I asked ChatGPT and it said I can continue to access my pensions provided I crystallise at least a small slice of pension before the NMPA change - even just £1,000. It said this will "lock in" my access.
I'm not 100% convinced this is correct.
I found this page: https://atsipp.co.uk/customer-support/pension-chan...
Under the question "Will this affect individuals drawing benefits from drawdown funds (that were crystallised prior to 6 April 2028)?" it says "No - you can continue to draw benefits from your drawdown fund".
But I note that this is talking about drawdown funds that were already crystallised before April 2028. So am I correct in thinking that ChatGPT's strategy of crystallising a tiny bit on my 55th birthday won't work, because I would then be unable to crystallise further funds after the NMPA change, until I'm 57?
If I want to access my pension before 57, would I need to crystallise enough to last me until my 57th birthday, and do this before April 2028?
Or is ChatGPT actually correct, and crystallising a small amount on my 55th birthday "locks in" my ability to crystallise further funds regardless of the NMPA change?
I thought I was clued up on this change but the scenario you mention for this particular narrow age range you're in hadn't actually occured to me until now.
Having just checked I will be unaffected as will have hit 57 by that point anyway, but yes if just a year younger it seems it could cause an issue either starting or interrupting my planned phased drawdown approach (I haven't taken anything yet as planning to work for another year or 18 months).
On that reading it does seem like you'd want to crystallise enough prior to provide adequate income to take you up to April 2028. I stand to be corrected if anyone knows more.
I also got a similar AI output of the situation to the one you got, but it is by no means clear that is the case.
According to this article:
https://professionalparaplanner.co.uk/technicalzon...
"The unresolved areas
Despite the legislative framework, several practical questions remain unanswered. Namely, how the rules will apply to income already in payment. For example, a member in the window cohort who crystallises benefits at 55 and enters drawdown may still be only 56 on 6 April 2028.
The prevailing assumption is that income from existing drawdown funds should be able to continue, but that further crystallisations, particularly to generate new tax-free cash sums, may be blocked until age 57. HMRC has yet to confirm this explicitly.
Similarly, there is no definitive guidance on partial crystallisation. If only part of a pension is crystallised before the change, it remains unclear whether the remaining uncrystallised balance can be accessed during the intervening period between ages 55 and 57.
Operational uncertainty remains around evidencing protection. While the Association of British Insurers (ABI) is developing cross-industry data standards, there is currently no HMRC-mandated approach for how ceding schemes should document and report PPA ring-fencing to receiving providers.
In the absence of a mandated disclosure format, paraplanners should remain vigilant, as operational differences between providers may give rise to the risk of protections being unintentionally overlooked or even lost for all intents and purposes, even when advice and intent are sound.
HMRC indicated in a 2022 Pension Schemes Newsletter that transitional regulations are being developed to ensure the policy works as intended . Until HMRC confirms how the transitional arrangements will work, paraplanners should adopt a cautious, assumption-aware approach, particularly when modelling retirement around the 2027/28 tax year.
For clients, the choice to crystallise at 55 versus waiting may reflect policy timing rather than tax efficiency or investment return."
Having just checked I will be unaffected as will have hit 57 by that point anyway, but yes if just a year younger it seems it could cause an issue either starting or interrupting my planned phased drawdown approach (I haven't taken anything yet as planning to work for another year or 18 months).
On that reading it does seem like you'd want to crystallise enough prior to provide adequate income to take you up to April 2028. I stand to be corrected if anyone knows more.
I also got a similar AI output of the situation to the one you got, but it is by no means clear that is the case.
According to this article:
https://professionalparaplanner.co.uk/technicalzon...
"The unresolved areas
Despite the legislative framework, several practical questions remain unanswered. Namely, how the rules will apply to income already in payment. For example, a member in the window cohort who crystallises benefits at 55 and enters drawdown may still be only 56 on 6 April 2028.
The prevailing assumption is that income from existing drawdown funds should be able to continue, but that further crystallisations, particularly to generate new tax-free cash sums, may be blocked until age 57. HMRC has yet to confirm this explicitly.
Similarly, there is no definitive guidance on partial crystallisation. If only part of a pension is crystallised before the change, it remains unclear whether the remaining uncrystallised balance can be accessed during the intervening period between ages 55 and 57.
Operational uncertainty remains around evidencing protection. While the Association of British Insurers (ABI) is developing cross-industry data standards, there is currently no HMRC-mandated approach for how ceding schemes should document and report PPA ring-fencing to receiving providers.
In the absence of a mandated disclosure format, paraplanners should remain vigilant, as operational differences between providers may give rise to the risk of protections being unintentionally overlooked or even lost for all intents and purposes, even when advice and intent are sound.
HMRC indicated in a 2022 Pension Schemes Newsletter that transitional regulations are being developed to ensure the policy works as intended . Until HMRC confirms how the transitional arrangements will work, paraplanners should adopt a cautious, assumption-aware approach, particularly when modelling retirement around the 2027/28 tax year.
For clients, the choice to crystallise at 55 versus waiting may reflect policy timing rather than tax efficiency or investment return."
Edited by WayOutWest on Friday 6th March 18:22
Hmmm…
So it seems that it’s not certain, but perhaps I will be able to crystallise enough on my 55th birthday to last until I’m 57, and continue to draw it down after the NMPA change.
Maybe.
How can HMRC have failed to clarify this? It’s only 2 years away!
By the way, I had previously convinced myself that the anticipated rise to 58 would also affect me, but from what I’m reading that’s now expected in 2034. Is that correct? If so, it won’t affect me because I’ll be over 58 by then.
So it seems that it’s not certain, but perhaps I will be able to crystallise enough on my 55th birthday to last until I’m 57, and continue to draw it down after the NMPA change.
Maybe.
How can HMRC have failed to clarify this? It’s only 2 years away!
By the way, I had previously convinced myself that the anticipated rise to 58 would also affect me, but from what I’m reading that’s now expected in 2034. Is that correct? If so, it won’t affect me because I’ll be over 58 by then.
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