The government has closed the opportunity for people to transfer to a pension scheme that would offer pension age protection ahead of its planned minimum pension age hike.
The government plans to raise the normal minimum pension age (NMPA) to 57 in April 2028 and had originally given people until April 2023 to either join or transfer into a scheme which could offer a protected pension age.
But it has now closed this window without prior notice. The last accepted applications for transfer had to be made before midnight yesterday (November 3).
In an announcement this morning (November 4), John Glen, economic secretary to the Treasury, said the move was meant to be announced at the Autumn Budget but concerns over a rush to transfers led the government to do it this way.
Glen said: “Some pension savers could find themselves with poorer outcomes (or even be the victim of a pension scam) if they were rushed by rogue advisors to make a quick transfer in the short time period before the window closed.”
Those who have already made a “substantive request” to transfer their pension to a pension scheme with a protected pension age of 55 or 56 will still be able to keep or gain a protected pension age assuming the transfer is completed in accordance with the current regulations, the government said.
Yvonne Braun, director of long-term savings and protection at the Association of British Insurers, said while the move was welcomed it could make it harder to plan for retirement as people would have different ages to contend with.
Braun said: “The changes stop scammers from exploiting uncertainty, and also prevent market distortions as there are now no incentives to transfer purely to access a pension at age 55.
“However, most savers have more than one pension pot and millions will now have a mix, with some pots they can access at age 55, and others where they need to wait to 57 making it harder to plan for retirement."
Jon Greer, head of retirement policy at Quilter, also hoped the rules would not mean that schemes would have to ring-fence certain rights.
Greer said: “This complexity is all for a two-year increase in the pension age, which for the overwhelming majority isn’t going to make a jot of difference. And it will still add complexity to the future pension dashboard system, and ‘simpler’ pension statements.
“The government should grasp this opportunity to simplify the pension system, and a good place to start is on the rules around block transfers.”
Tom Selby, head of retirement policy at AJ Bell, also said complexities brought about by the age change itself would remain.
He said the industry was now in a “ludicrous situation” where people who are today in a scheme with a protected pension age and later transfer might end up in a scheme with two different NMPAs.
“As such, the complexity created by this change will remain,” he said.