In this article we review the impact of the step-change in Normal Minimum Pension Age (NMPA) from 50 to 55 on 6 April 2010: in particular, on individuals who having reached age 50, before 6.4.10 designated part or all of a pension arrangment as USP. There is considerable uncertainty about what they are allowed to do under the pension tax rules.

In summary, and of course subject to scheme rules, we believe they can

• continue to draw income at the existing level fom the pre-6.4.10 designated USP fund; or
• transfer the USP fund to another provider who allows USP.

Until age 55 is attained, we believe the following actions cannot - pending confirmation of HMRC's interpretation of the law - be taken without risking an unauthorised payment charge:

• designate further funds as USP, whether under the same or any other arrangement, and irrespective of whether the arrangement was established before or since 6.4.10;
• draw any income at all from a fund transferred from one USP provider to another (ie not even continued drawdown at the pre-6.4.10 level); or
• purchase a lifetime annuity or a scheme pension with the pre-6.4.10 designated USP fund.

It is unclear whether the following actions taken prior to attainment of age 55 under a pre-6.4.10 designated USP fund will result in unauthorised payment charges:

• increased income (within GAD limits);
• purchase of a short term annuity.