For the unlucky few aged 50 to 55 years that need to change unsecured pension (income
drawdown) providers in the UK, having only taken pension benefits recently, the change of retirement age to 55 years is a real hindrance. HMRC have confirmed that you can change providers but any income taken from the new provider pre age 55 years will be deemed an unauthorised payment and be charged at 55%!
This will also be the case in transferring to or between QROPS (Qualifying Recognised Overseas Pension Schemes) providers.
HMRC says that following the publication of the article it has taken further legal advice and it can now confirm that a transfer from one income drawdown fund to another provider before age 55 years old would now be classified as a recognised transfer. A 55% unauthorised payment charge would still be levied on any income taken through the new income drawdown fund.
HMRC says: Following further legal advice, HMRC can confirm that a transfer of an income drawdown fund to an income drawdown fund of another provider for an individual aged between 50 and 55 years old would be a recognised transfer and as such the transfer would not be subject to an unauthorised payment charges.
However, any payments from the new fund would incur unauthorised payment charges. This is because the individual needs to meet the prevailing new normal minimum pension age (i.e. age 55 years) at the time of the transfer. This restriction applies until the individuals 55th birthday.