They can also ‘block transfer’ to an ‘age 57’ scheme so that all the benefits in the new scheme will receive the protected earlier age. This includes contributions paid in after transfer and any benefits already built up in the new scheme. However, there are two key differences when compared with the old block transfer rules.

Firstly, the 12-month membership requirement has fallen away. Members who have a protected pension age under the new regime can complete a block transfer to a scheme they have already been a member of for more than 12 months and retain their protection. Successive block transfers can also be made without impacting the protection. 

Secondly, unlike previous protected pension ages, there is no requirement to crystallise all benefits at the same time to make use of the protection. 

It may be challenging for schemes to ring-fence 2028 protected pension rights from other funds in the scheme if an individual transfer is completed, and there remains some question whether all ‘age 57’ schemes will facilitate paying benefits earlier where age 55 protected funds are transferred in. 

Even though the NMPA is not increasing until 2028, these new rules are already in effect and have had an impact on transfers since November 2021.

There is room for confusion with both the old and new rules running alongside one another – it would have been far simpler to replace the old rules, or to do away with the block transfer requirement entirely.

Smart planning will be essential to help navigate these changes. Block transfers were originally intended to protect pre-A-day entitlements, but now a new generation will need to consider protected pension ages as part of their retirement planning and their use may be renewed. 

Bethany Joslyn is a technical consultant at AJ Bell