Normal Minimum Pension Age update

Essential information for your retirement planning.

A significant change is on the horizon that may affect when you can access your pension money. We’ll guide you through this change and its potential implications, so you can confidently prepare for retirement.

The current normal minimum pension age (NMPA) is 55, which means you can start taking your pension savings once you reach that age. Some exceptions exist, such as if you’re experiencing ill health or have a lower protected pension age. However, the general rule applies to most people.

Starting from April 6, 2028, the NMPA will increase to 57. This change may affect you differently depending on your birthdate.What does this mean for me?

What actions should I take?

If you were born after April 5, 1973:

It’s a good idea to review any existing plans to determine if the change will affect them. You may need to plan for another couple of years of saving, which could alter your retirement income. No action is required if you didn’t intend to access your pension savings before turning 57.
Regularly reviewing your retirement plans is a smart habit, especially as you approach the age when you’d like to start accessing your pension savings.

If you were born after April 6, 1971, but before April 6, 1973:

You have two options – carefully consider which one best suits your circumstances.

Option 1: Access your pension savings before the deadline

If you don’t want to wait until you’re 57 to access your pension savings, you’ll need to begin withdrawing funds between turning 55 and April 6, 2028. Remember that you can access your pension savings without taking large or regular amounts; you can decide what’s right for you. However, obtaining professional financial advice before making any decisions is essential.

Remember that leaving your pension savings invested longer allows for potential growth. Also, note that taking taxable money from your plan (anything exceeding your tax-free entitlement) may reduce the amount you can contribute to your plan due to the money purchase annual allowance. Learn more about this on our website.

Option 2: Wait until you turn 57

No action is needed if you weren’t planning to access your pension savings before age 57. You can access your pension savings at any time after turning 57. However, if you withdraw funds before April 6, 2028, you’ll retain the opportunity to do so before age 57.

If you were born on or before April 6, 1971:

No action is required, as you will already be 57 when the change takes effect, and your retirement plans won’t be impacted.

Not retired yet? Review your retirement date

Even if you can no longer access your money at 55, your retirement date may still be set to your 55th birthday. It’s worth checking it now.

You can change your retirement date anytime, but the chosen date can affect your plan. For example, if you’ve invested in a lifestyle profile, your pension investments are designed to transition to lower-risk investments as you approach your retirement date. This helps reduce the impact of market fluctuations on your pot’s value.

If your retirement date is set to your 55th birthday, but you don’t plan to access your money until 65, your investments won’t align with your plans, potentially affecting your pension savings’ value when you’re ready to withdraw them.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

Price of adulthood

Financial responsibilities increase significantly after 25.

Paying essentials like utilities and council tax becomes a reality as young adults transition from student life to the workforce. The reality of financial responsibilities often accompanies the excitement of newfound independence during one’s mid-twenties.

According to research, young workers may find their first salaries insufficient to cover necessities like utilities and council tax. The study reveals that the number of people making regular payments significantly increases among those aged 25 to 34 compared to those aged 18 to 24[1].

The data highlights that only 34% of 18 to 24-year-olds currently pay utility bills, but this figure doubles to 68% among 25 to 34-year-olds. Similarly, internet usage payments rise from 45% for 18 to 24-year-olds to 70% for 25 to 34-year-olds.

Tips for managing regular payments

By following these tips and taking control of their financial responsibilities, young adults can ease the transition from student life to the workforce and set themselves up for a more secure financial future.

Create or review your budget

A household budget can help you afford essential costs and identify potential savings. It can give you peace of mind about whether you can afford your essential expenses and have money left over for any non-essentials. If you already have a budget, it’s worth checking to see if it’s still working for you, especially as many costs have risen over the last few months.

Looking closer at your current and past spending habits, you might find ways to cut costs in the future – freeing up some money to put elsewhere. Budgeting apps can analyse your spending and categorise expenses, making finding areas where you can cut costs easier.

Check for savings

Find opportunities to cut costs by switching providers or finding better phone contracts or utility bill deals. It’s always worth seeing if you can cut costs by changing providers or shopping around to see if you can get a better deal on your phone contract or utility bills, for example.

Nowadays, switching providers is a relatively seamless process, and it can save you substantial amounts. As you age, you should check for any discounts or benefits you’re entitled to.

Set goals and consider ways of saving

Establish clear savings goals and explore options to manage your finances better. Even if you don’t have the money to set aside right now, analysing your options will help you better manage your finances. If you can save, first try to build up a ‘rainy day fund’ for those unexpected expenses that can tip monthly budgets over the edge, like an appliance or car repairs.

Consider long-term savings and retirement planning

Saving into a pension plan offers tax relief on payments, and employers often contribute as well. They offer tax relief on your payments, so putting money into one can cost less than you think. If you have a workplace pension plan, your employer will typically pay into this – usually making a minimum payment of 3% of your earnings.

In comparison, your minimum personal contribution generally is 5%, with some employers willing to pay more. Some even match the employee payments up to a certain amount – meaning if you can put in more, they will too. It might be worth checking to see what’s possible, as this is a great way to boost your pension savings. Starting contributions early can significantly impact your total retirement fund.

Source data:
[1] Boxclever conducted research among 6,000 UK adults. Fieldwork was conducted 6th Sept – 16th October 2022. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

Financial wellbeing

More than 24.5 million people are financially disengaged.

Do you often review your finances? Or are you one of those people who just hope for the best? Although managing finances may not be the most exciting activity, keeping track of your financial wellbeing can make a significant difference to your life, both in the present and in the future. Taking control of your finances will enable you to meet your financial goals and improve your overall financial health.

Worryingly more than 24.5 million people (46%) feel financially disengaged, according to new research[1]. The study also shows that one in 20 adults – the equivalent of 2.4 million people – were previously financially engaged before changing their behaviour[2].

Financial uncertainty

Key reasons for this change include feeling financially secure enough to be less diligent with managing their money (20%), or because other areas of their life have become busier (18%). However, almost a fifth (17%) couldn’t state a reason.

But previous periods of financial uncertainty, such as recessions, were stated as the key driver for people becoming financially engaged (27%), so the current cost of living crisis could mean people keep a closer eye on their money.

Retirement planning

Almost two-thirds of respondents (62%) said they regularly check their household budget and their spending, while 73% shop around for the best deal, or use discount codes and vouchers (64%). On average, pre-retirees (those aged 55+ who are still in work) are more financially engaged than the rest of the population (62% compared to the UK average of 54%).

But many are still inactive when it comes to their retirement planning, suggesting people might not know where to start. More than a third (34%) do not currently check their workplace pension while 28% do not currently review their personal pension.

Money habits

Separate research shows one in five people still reach midlife without having engaged with their retirement at all[1]. Taking small steps to improve your money habits can have a huge impact on your life. It can also help you feel more in control of your financial situation.

Against a landscape of rising costs and record levels of inflation, it can be easy to bury your head in the sand. However, as the research shows, periods of financial difficulty can be one of the leading reasons people take charge of their finances.

Retirement finances

While it’s positive that pre-retirees, in particular, are more financially engaged than the average person, it is concerning that they aren’t engaging in vital steps to prepare for retirement, such as checking their pension.

This is the first step of the decumulation phase; however, some people could be leaving themselves at risk of not knowing their full financial picture or how to actively manage their retirement finances when they get there. The decumulation phase is an important aspect of retirement planning that many people overlook.

Income streams

During this phase, we convert our assets into income streams that will fund our retirement. With advances in healthcare and an increase in life expectancy, it’s becoming more important than ever to plan for a longer retirement. Investment can play a crucial role during the decumulation phase.

It’s important to continue making our money work hard even after we retire, so that we can meet our financial needs and maintain our standard of living. A well-diversified investment portfolio that balances risk and return can help us achieve our retirement goals.

Greater confidence

To enjoy the decumulation phase with greater confidence and peace of mind, it’s important to have a realistic projection of income flows and expenses. This means creating a budget that takes into account expected income from sources such as Social Security, pensions and investment income, as well as our estimated expenses for healthcare, housing and other living expenses.

Preparing for retirement can be a daunting task, but by following a few simple tips, you can make sure you’re on track to living out your golden years in comfort and security.

Here are the top four things you can do to prepare for retirement:

1. Prepare a budget

One of the most important things you can do is to create a realistic budget that will help you track your expenses and income. This will allow you to identify any areas where you can cut back and save more money for retirement. By tracking your spending and income, you can create a plan that helps you save for a comfortable retirement.

2. Consider pension decumulation options

As you approach retirement age, it’s essential to explore the various ways you can convert your pension savings into a retirement income. There are several options available, such as annuities, income drawdown and immediate vesting personal pensions. Seeking professional financial advice will help you understand your options better and make informed decisions about how to access your pension.

3. Review asset allocation

As retirement approaches, it’s essential to reduce exposure to higher-risk assets such as equities. By reviewing your asset allocation, you can adjust your investments to make sure you have a well-diversified portfolio that is designed to provide steady income for your retirement years.

4. Review your plan regularly

Regularly reviewing your progress is crucial to ensure you are ready for retirement and make the necessary adjustments if needed. Changes in your income, expenses or the financial climate may require you to adjust your plan.

By following these four tips, you can set yourself on a path to financial security for your retirement years.

Source data:
[1] Research was carried out online by Opinium Research amongst 4,000 UK adults aged 18+ between 14–20 October 2022. 1,856 participants indicated that they were financially disengaged in the survey. 1856/4000=46%, which equates to 24,541,000 UK adults.
[2] 181 participants indicated that they were financially disengaged in the survey. 181/4000=5%, which equates to 2,390,000 UK adults.
[3] Opinium survey of 4,009 UK adults aged between 40 and 60 years old in the UK was conducted between 28 December–6 January 2021.

THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP AND YOU MAY GET BACK LESS THAN YOU INVESTED.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.

A PENSION IS A LONG TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND ON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES AND TAX LEGISLATION.

Professional financial advice matters

Making informed decisions about how to best allocate your resources.

Financial planning is a crucial step towards achieving financial freedom and security. By taking the time to thoroughly evaluate your needs and personal goals, you’ll be able to make informed decisions about how to best allocate your resources.

With a comprehensive professional financial plan in hand, you’ll have the confidence and peace of mind to pursue your short-term goals and work towards your long-term future. With professional guidance, you’ll be inspired to realise that you have far more resources at your disposal than you ever imagined.

Better equipped

According to a recent study, UK consumers who receive professional financial advice can expect to retire on average three years earlier than those who do not seek professional advice, with advised consumers planning for retirement at age 66 as opposed to non-advised consumers who expect to retire at 69[1].

This underlines the positive impact that professional financial advice can have on retirement preparations, with those who seek advice feeling better equipped for their later years. The study identified that twice as many people who seek financial advice create a detailed spending plan in retirement compared to those who don’t take advice, with 45% of advised people falling under this category as opposed to 18% of non-advised consumers.

Enjoying retirement

Financially advised consumers expect to fund their retirement for a longer period, with an average of 23 years, compared to 17 years for non-advised people before pertinent cutbacks must be made. In addition, the study reveals that financial planning tends to be beneficial for people already in retirement.

Almost all (96%) of wealthy retirees who did a great deal of financial planning or just planned their finances slightly say they’re enjoying their retirement, dropping to 72% among those who have done no financial planning.

More pronounced

Regrets for non-advised retirees are more pronounced, with the majority stating that they require more money in retirement compared to their original estimates, and that they wished they had planned more thoroughly, compared to advised people.

Despite having a higher household income, 23% of wealthier pensioners, with an income of between £40,000 and £49,999, wished they had planned more thoroughly, indicating that the value of advice remains consistent regardless of income.

Significant variation

Planning for retirement can be overwhelming, leading to several considerations, making financial advice crucial for people to feel more confident and prepared about their future. The research results underscore the significant variation between the retirement plans and experiences of those who have taken advantage of financial advice and those who haven’t.

The research findings demonstrate the value of professional financial advice in terms of the retirement age and the enjoyment of one’s retired life. So start planning today, and take the first step towards a brighter tomorrow.

Source data:
[1] Boxclever conducted research for Standard Life among 6,000 UK adults. Fieldwork was conducted between 6 Sept–16 October 2022. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics. Comparisons to data from last year are taken from Boxclever research among 4,896 UK adults conducted between
16–23 July 2021.

More people choosing semi-retirement for a variety of reasons

Two in five over-55s plan to gradually phase out working life before State Pension age.

Semi-retirement is an option to consider for individuals who may not be ready to fully retire, but still wish to reduce their work hours and gradually phase out working life. By choosing to semi-retire, you can maintain a good work-life balance while still earning an income.

Many people choose to semi-retire as it allows them to enjoy their hobbies, travel and spend more time with their loved ones. This option also provides a smooth transition into retirement, enabling you to adjust and focus on what truly matters in life.

Changing attitudes towards employment

A recent study has identified that more than two in five (44%) 55-64-year-olds plan to move into ‘semi-retirement’ before they reach 65, allowing them to draw on their pension savings while continuing to work part-time[1].

The study investigated changing attitudes towards employment and retirement as a result of the Covid-19 outbreak. The findings highlighted people’s shifting emotional and financial wellbeing as they deal with post-pandemic job insecurity.

Continuing to work through retirement

More than nine in ten (91%) people said they were ‘much happier’ after reducing their working hours, implying that semi- or partial retirement – ‘part-tirement’ – could be the solution for more than half (55%) of workers who like the idea of continuing to work through retirement, giving them freedom in later life while remaining part of the workforce.

Retirement can account for up to a third of an individual’s life as life expectancy continues to rise and more individuals than ever are surviving to age 100 and beyond. Recent changes in government policy, such as the increase in the State Pension age to 67 in 2028, have caused people of all ages to reconsider their plans for work and retirement.

Flexible strategy to working later in life

Over three-quarters of 18-34-year-olds, or 59%, say they intend to semi-retire before the age of 65, rising to 61% of those aged 35-44. The findings show that longer working lives are prompting younger people to consider a flexible strategy to working later in life in order to keep their career.

According to recent ONS data, 48,000 over-50s have lately returned to the workforce, as Chancellor Jeremy Hunt encourages people who have retired or are considering retirement to pursue part-time or full-time work to help alleviate some of the UK’s labour shortage challenges.

Help improve mental and physical health

But the study indicates that people prefer to work past the age of retirement, implying that the UK’s workplace participation problems would not just be solved by encouraging people to return to work. Four in five, or 80%, of those over the age of 65 said they enjoyed the notion of working into retirement, with at least two in five, or 41%, of other age groups, agreeing.

Continuing to work can help improve mental and physical health, which informs overall wellbeing, and it can also keep loneliness and isolation at bay. The urge to retire early is frequently motivated by persons seeking more independence while being physically strong and healthy enough to enjoy it.

Semi-retirement can be a win-win situation

The study shows that semi-retirement can be a win-win situation for both employers and employees, as companies gain from preserving the skills and knowledge of skilled workers in the workforce, while workers can make decisions about maintaining a healthy lifestyle and income in retirement.

In a climate where longer working lives are becoming the norm, semi-retirement is a chance to experience the ‘best of both’, which can benefit both employees and employers. Retaining connection to the workplace is an appealing option for many people who are still working towards their financial goals or are simply not ready to stop working.

Make a big, positive difference in the long term

It also provides an opportunity for employers to continue to harness the knowledge and expertise of more experienced staff for longer. As people live longer, investing time in ourselves and considering every option available in later life is the best way to ensure we have the retirement we aspire to. Starting to think and plan further ahead is a small step that can make a big, positive difference in the long term.

The study clearly identifies that semi-retirement looks set to continue to be a popular option for many retirees, and for good reason. Whether you choose to work part-time for financial reasons or simply because you enjoy it, semi-retirement can be a great option for anyone looking to make the most of their retirement years.

Source data:

[1] Research among 2,000 UK employees working in organisations with over 1,000 employees was conducted independently on behalf of Aviva by Quadrangle in February 2020, August 2020, March 2021 and June 2022. Not all figures add up to 100% as figures have been rounded throughout the report.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS(AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.