I turn 55 this year and want to cut my working hours. Can I take money from my SIPP?

In our weekly series, readers can email in with any questions about retirement and pension savings to be answered by our expert, Rachel Vahey, head of public policy at investment platform AJ Bell. There is nothing she does not know about pensions. If you have a question for her, email us at money@theipaper.com. Question: I have got both a workplace pension and a Self Invested Personal Pension (SIPP). I want to cut my working hours next year and I am wondering if I can make up the income by taking some money from my SIPP. I thought I could take my pension money from 55 – which I will be next February, as I was born in 1972 – but I have read that the pension access age is going up. Can you tell me if this is right, and what it means for me? Shorts Answer: At the moment, most people cannot access their private pension savings until they turn 55. This is known as the normal minimum pension age (NMPA). From 6 April 2028, it will rise to 57. The change is being made because the State Pension age rises from 66 to 67 between April 2026 and March 2028, and the aim is to keep the normal minimum pension age around 10 years below the State Pension age. We have known about the rise for some time, but HMRC has recently provided more detail on how it will work. The effect on you will depend on your date of birth. If you were born before 6 April 1971: the change should not affect you, because you will turn 57 before 6 April 2028. If you were born on or after 6 April 1973: you will normally have to wait until age 57 to access your pension, unless you have a ‘protected pension age’ – where you continue to be allowed to take it earlier. If you were born between 6 April 1971 and 5 April 1973: you fall into a transition group. You can access your pension from age 55 up to 5 April 2028. If you have not accessed it by then, you will usually need to wait until you turn 57, unless you have a protected pension age. When you access a defined contribution pension, you can usually take up to 25 per cent of the amount tax-free. You can then take the rest as a taxable lump sum, move it into drawdown and make taxable withdrawals, or use it to buy an annuity that pays a taxable income for life. You can also combine these options. If someone in the transition group starts drawdown or buys an annuity before 6 April 2028, payments already in progress can continue. Drawdown withdrawals and annuity income will not automatically stop when the minimum pension age rises. The position could be more complicated if they have accessed only part of their pension and left the rest invested without moving it into a drawdown pot. This is sometimes called ‘partial crystallisation’. For example, they may move small amounts into drawdown over time, or take a series of lump sums that are normally 25 per cent tax-free and 75 per cent taxable at your marginal income tax rate. If someone born between 6 April 1971 and 5 April 1973 has accessed only part of their pension by 5 April 2028, they may be unable to access any further untouched pension funds from then until they turn 57. This could interrupt a plan to take regular amounts from the pension. If this could affect you, it is worth planning ahead. You might choose to take a little more from your pension before 6 April 2028 to cover the gap, for example by moving more into drawdown. That would also mean taking a larger tax-free cash sum so it’s always worth thinking through the consequences. Finally, check whether you have a protected pension age. Some pension scheme members will keep the right to access their benefits at 55 or 56 after April 2028. Protection normally applies to a particular pension scheme, so ask your scheme provider whether it applies to you. Be careful before transferring a pension, as a transfer could affect this protection. Ask your provider if you’re not sure.