The minimum age for private pension withdrawals will increase from 55 to 57 in 2028, according to the Treasury.
The pension freedom reforms introduced by former Chancellor George Osborne have allowed pension holders to access their savings pots at 55 before the State Pension retirement age, which is currently 65.
Under the current rules, pension holders can take some or all of the cash held in private pension pots when they turn 55, including taking 25 per cent of their savings tax-free as a lump sum.
When the freedoms were introduced, it was agreed that the age restriction should be 10 years behind the State Pension age.
This is why, with the State Pension age set to rise in October this year to 66 and then again between 2026 and 2028 to 67, the Treasury has decided to amend the rules.
John Glen, Economic Secretary to the Treasury, said: “In 2014 the Government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life.
“That announcement set out the timetable for this change well in advance to enable people to make financial plans, and will be legislated for in due course.”