The following article will aim to describe the forthcoming changes in the Normal Minimum Pension Age (NMPA), along with the position of the SS&C Hubwise SIPP and how members may retain the current age of 55 on transfer to a scheme where the contract is written to the NMPA rather than 55. 

Introduction

Currently, a member of the Hubwise SIPP or associated scheme, may start to take their pension savings once they reach age 55. This is known as the normal minimum pension age (NMPA). There are some exceptions to this – like if they are suffering from ill health (PTM063400 for additional information on ill health benefits), or have a lower protected pension age (please see PTM062205 for further information on protected pension ages) , for example. But generally, the rule is the same for most members of a registered pension scheme.

 From 6 April 2028, the NMPA is rising to 57. So, depending on when the member of the scheme was born, this could impact them in different ways.

There is no phasing of the introduction of the new age; the rules in relation to the implementation of the new NMPA are as follows:

• Members born before 6 April 1971 will be unaffected as they will have reached age 57 before the
   6 April 2028.
• Members born after 5 April 1973 will have the earliest date they can access their pension benefits delayed by two years.
• Clients born between 5 April 1971 and 5 April 1973 will have a window from their 55th birthday to 6 April 2028 to take benefits before the NMPA increases to 57. If they don't access their pension during this time, they will need to wait until their 57th birthday.

What is a Protected Pension Age[AY1] [DW2] 

A protected pension age applies at scheme level, so an individual may have a protected pension age under one scheme, but not under another.

They will have a protected pension age under a scheme if:

1. before 4 November 2021 they had the right to take benefits before, they reached age 57,
2. that right was unqualified,
3. on 11 February 2021 the scheme rules included provision to pay benefits before age 57, and
4. they were in the process of a substantive transfer to a scheme before 4 November 2021

SS&C Hubwise Scheme Position

Within the scheme rules and trust deed of the Hubwise SIPP it mentions that members cannot take retirement benefits until they reach the NMPA. This means that any member of the scheme who does not have a protected pension age due to occupational or block transfer/new individual transfer rules will not be able to take benefits under the age of 57 when the new NMPA is introduced in April 2028.

This is stated in clause 16.1.3 of the trust deed. Please note the full deed can be provided on request if required.

Note: This does not mean that a member of the SS&C Hubwise SIPP will have to take all of their benefits at the new NMPA in 2028, members may have transferred from a scheme that holds a Protected Pension Age and has been able to maintain those rights for that transfer only, please see the section on Individual transfers for further information.

Can someone with a protected pension age of under 57 transfer their benefits and retain the protected pension age?

Individuals who have an unqualified right to take their benefits before age 57 can transfer their benefits now and maintain that right in their new plan. There are 2 ways of doing this:

• as part of a block transfer, or
• as part of an individual transfer

A block transfer, sometimes referred to as a ‘buddy transfer’, is a transfer of the pension rights relating to the individual and at least one other pension scheme member and, if certain conditions are met, allows an individual to keep their protected pensions age.

What are the age 55/56 block transfer conditions?

Any rights to take benefits from 55 can also be protected upon transfer if it is part of a block transfer. Please note that the block transfer conditions for age 55 protection are slightly different to the previous block transfer conditions (PTM062240).

For those protecting a right to a minimum pension age of 55, a block transfer needs to meet the following conditions:

• more than one member of the scheme must transfer at the same time to the same scheme.
• 'same time' doesn't mean funds have to transfer on the same day, as long as the transfers are meant to be part of the same transaction.

The conditions are the same as the original block transfer conditions except:

• the individual can have been a member of the receiving scheme for any amount of time, and
• they don’t have to take all their benefits in the receiving scheme at the same time.

The requirement for them to have unqualified right (please see PTM062210 for details on unqualified rights) under the scheme rules also remains. However, this time this right had to be in the scheme rules on 11 February 2021. This is the date the consultation paper on increasing the normal minimum pension age to 57 was first published.

If their pension savings are block transferred, this means the right to take benefits from age 55 is also transferred to the receiving scheme. However, this only applies if the individual had the right to an age 55 normal minimum pension age before 4 November 2021.

Individual transfers

It’s also possible to preserve a member’s age of 55 NMPA when an individual transfers on their own, and not as part of a block transfer.

These benefits need to be ringfenced, and the protection only applies to the benefits from that transfer. This means any benefits resulting from further transfers received or contributions paid after the transfer will not benefit from the protected pension age of 55.

When processing a transfer for a member using this method, the whole arrangement must be transferred. However, it isn’t a requirement to transfer all arrangements held within the scheme. There is no requirement for the member to have a protected pension age already within the receiving scheme, and as such, the SS&C Hubwise scheme is eligible to receive these transfers.

Please note that to accept and apply the rights to the scheme, the ceding scheme must confirm the originating scheme had a protected retirement age, which will then be applied to that transfer alone, this cannot be provided by an attentive party (i.e. an individual or entity, such as a financial adviser, that is actively involved in managing or overseeing the pension scheme.)

Summary

The following is a summary of the key points on the above sections:

• The Normal Minimum Pension Age is increasing to age 57 from April 2028.
• The way the deed of a pension scheme has been written on a member’s scheme will determine the age that benefits can be taken from. If written to the NMPA, this will always be the age set by the UK government, currently 55 and rising to 57 in April 2028. Each scheme should be able to provide you with a copy of the relevant scheme documents on request.
• Members who will be 57 before 6 April 2028 are not affected by the increase in the NMPA.
• The SS&C Hubwise SIPP is written to the NMPA. This means the NMPA will increase to 57 in April 2028.
• The SS&C Hubwise SIPP can accept block transfers and individual transfers with a protected pension age.
• It is the responsibility of the ceding scheme to advise SS&C Hubwise of any transfers with a protected pension age. SS&C Hubwise will only treat it as one when it comes from the ceding scheme.
• Any individual transfer with a protected pension age will apply to that transfer only and will be ringfenced from other transfers and contributions.

If you require any further information on the NMPA and how the Hubwise SIPP will operate following a block transfer or individual transfer, please contact us via Freshdesk, and we will provide these details.