Millions of pension savers are facing a retirement savings “cliff edge” that could leave them waiting an extra two years to access their money.
Experts are warning that people in a specific age group may only have a short window to avoid being caught by the rule change before a key deadline in April 2028.
According to PensionBee, savers born between 6 April 1971 and 5 April 1973 are at the centre of the issue.
The minimum age at which most people can access defined contribution pensions is due to rise from 55 to 57 on 6 April 2028, affecting workplace and personal pension schemes.
Anyone born on or before 5 April 1971 will avoid the change because they will already have turned 55 before the new rules come into force.
Those born after 5 April 1973 will automatically fall under the higher minimum pension age of 57.
However, people born between 6 April 1971 and 5 April 1973 face what experts describe as a “cliff edge” situation.
Savers turning 55 between 6 April 2026 and 5 April 2028 will have only a limited period in which they can start accessing their pension before the age threshold rises.
Those born after 5 April 1973 will automatically fall under the higher minimum pension age of 57
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GETTYShould these individuals fail to access or crystallise their pension before the April 2028 deadline, they may find themselves unable to touch their retirement savings until they turn 57 – potentially waiting nearly two extra years.
Maike Currie, VP Personal Finance at PensionBee, said: “For some savers this could come as a nasty shock. Many people simply assume they will be able to access their pension at 55, not realising the rules are changing.”
She added: “There is a very specific cohort – those born between April 1971 and April 1973 – who face a potential cliff edge.”
For some savers this could come as a nasty shock
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GETTYMs Currie warned that missing the deadline to access pensions before April 2028 could leave savers “locked out of your savings for up to two more years.”
Despite the urgency, she cautioned against hasty decisions. “That does not mean people should rush to raid their pension.
“In many cases, leaving savings invested for longer may lead to a healthier retirement pot thanks to a few additional years of extra contributions and investment growth,” she said.
The expert emphasised that planning should begin now, particularly for those hoping to retire early or reduce their working hours during their mid-50s.
Savers should also be aware that accessing their pension in certain ways could trigger the money purchase annual allowance
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GETTYSavers should also be aware that accessing their pension in certain ways could trigger the money purchase annual allowance.
This restriction caps the amount that can be paid into a pension in a tax-efficient manner each year going forward.
For those weighing up their options, calculating potential retirement income from both age 55 and 57 could help inform the decision.
The choice ultimately depends on individual circumstances, including whether someone needs to bridge a gap between employment and retirement or wishes to phase down their working commitments gradually.