Big changes are due as of next month for holders of private pensions.
After that date, policy holders will need a special reason, such as serious ill health, to be able to begin drawing their pension before the age of 55 without paying extra tax.
Currently it is possible to start receiving money from a pension scheme from the age of 50 without paying extra tax. But from 6 April 2010, this will rise to 55.
Reasons someone may receive pension payments before the new minimum age include:
- they have a protected pension age (see glossary in the document below for more information)
- they are too ill to carry on with the same job or have a serious ill health condition
- they started receiving pension benefits before 6 April 2010, having reached the current minimum age of 50
The new normal minimum pension age applies to all occupational and personal pension schemes that receive tax relief.
For those aged between 50 and 55 and already receiving pension payments, this change to the normal minimum pension age will not affect those payments.
Companies administering occupational and personal pension schemes should have advice on hand for customers seeking to know more.