Minimum Retirement Age

Historically, the earliest age that pension scheme members could take their retirement benefits was 50.  From 6 April 2010, this changed to 55.

Who does it affect?

The change affects all members of all types of pension schemes. 

Are there any exceptions?

There are two broad exceptions:

1. Ill-health early retirement (which has no minimum retirement age); and
2. Members with a protected lower retirement age (see below).

Who has a protected lower retirement age?

In an employer's scheme, you have to have an unqualified right to draw your pension below 55.  That right must be in the rules on 10 December 2003, and you must have had the right on 5 April 2006. 

To have an 'unqualified right', the rules of the scheme must allow you to apply for and draw your benefits without the need for the employer's or trustee's consent (in normal health). 

But, protection is subject to certain restrictions:

1. The full pension must be taken;
2. You must leave employment and not return to employment with any employer connected with the scheme;
3. Protection is lost if you voluntarily transfer your benefits after 5 April 2006.  But it is not lost if the transfer is to new scheme by bulk transfer, e.g. in a wind-up.  In a bulk transfer, you keep the protected pension age that you had on 5 April 2006 in the previous scheme. (Successive bulk transfers can be made without affecting a member's protection.)

Different rules apply to Retirement Annuity Contracts (RAC) and personal pension plans. These plans can retain a retirement age lower than 50 in respect of 'special occupations' (e.g. footballers who can retire at age 35), as long as that right existed before 5 April 2006. For a list of these occupations please click here.  There is no protection for retirement ages between 50 and 54 years.

But note, since 6 April 2006, a reduction of 2.5% is applied to the lifetime allowance for each year before normal minimum pension age (50/55) that the pension is taken.

In the public sector, certain schemes listed in the Registered Pension Schemes (Prescribed Schemes and Occupations) Regulations 2005 give their members a right to take pension and lump sum benefits below the normal minimum pension age.  These schemes are:

• The Armed Forces Pension Scheme
• The British Transport Police Force Superannuation Fund
• The Firefighters' Pension Scheme
• The Firemen's Pension Scheme (Northern Ireland)
• The Gurkha Pension Scheme
• The Police Pension Scheme
• The Police Service of Northern Ireland pension Scheme, and
• The Police Service of Northern Ireland Full Time Reserve Pension Scheme.

Where a member of such a scheme takes a pension or lump sum benefits before the normal minimum pension age, there will be no reduction in the individual's lifetime allowance.

What about redundancy?

If the scheme had a rule by/on 10 December 2003 that gave its members an unqualified right to take pension benefits before 55, but only if they are made redundant, and any members are made redundant after 5 April 2010, are aged over 50 but under 55 and exercise their right to take pension benefits, they will have a protected pension age and will not be liable to a tax charge.