How do pension rules change when you turn 75?

Q. Why is there an age precipice at 75 for pension rules? Is anyone trying to get it removed?

A: Many people are aware that age 75 is important for pensions, but fewer understand why or what actually changes when you reach it.

Turning 75 has important implications for your tax treatment, meaning retirement decisions can become more limited and planning may become more urgent.

What happens when you turn 75?

Once you turn 75, you no longer receive tax relief on personal pension contributions. For that reason, many pension schemes don’t accept new contributions after this.

If you happen to be working at 75, your employer can still pay into your pension - provided these contributions meet tax rules.

Age 75 is also important for death benefits. If someone dies under the age of 75, their beneficiaries do not, at the moment, generally have to pay income tax or inheritance tax (IHT) on inherited pension wealth.

If someone dies aged 75 or over, beneficiaries normally pay income tax on money they receive from the pension but, currently, they do not usually pay IHT on that. However, from 6 April 2027, unused pension funds and certain death benefits will be included in the deceased's estate for IHT purposes.

Once you turn 75, you should still be able to take your pension’s tax-free cash, however the rules can become more complicated and potentially less favourable. Some pension providers may not allow you to take tax-free cash after 75.

• Read: Should I take a tax-free lump sum from my pension?

How 75 became ‘special’

Historically, turning 75 was seen as more of a milestone when it came to your pension. In the mid-2000s, when pension tax framework changed, policymakers needed a point at which pension tax advantages would stop building up indefinitely. Age 75 was chosen as a cut-off for this reason.

Several rules reinforced its importance. One was the Lifetime Allowance (LTA) - a cap on how much you could build up in UK pension savings over your lifetime without facing extra tax charges.

When you reached age 75, any uncrystallised funds (money not yet accessed) were tested against your available LTA, and a 25% tax charge was applied to any amount over this limit.

The LTA was abolished as of 6 April 2024 and was replaced by the Lump Sum Allowance (LSA) and the Lump Sum and Death Benefit Allowance (LSDBA). The LSA sets a limit on the total amount of tax-free lump sums you can take from your pension during your lifetime. While the LSDBA applies to the total value of lump sums and certain death benefits that can be paid tax-free, either during your lifetime or when you die.

• Learn more about the new lifetime tax allowances for pensions

Is anyone trying to remove the age 75 precipice?

Currently there is no high-profile campaign or widely supported proposal aiming to soften or remove changes to pension rules from age 75.

The age itself is often cited as an example of unnecessary complexity within the pensions system, particularly now that the Lifetime Allowance, one of the main reasons for its significance, has been abolished. While turning 75 does trigger changes, these are smaller than many people assume and are largely focused on tax treatment rather than access to pension savings.

An awkward number that refuses to go away

People cling to the idea of age 75 not because it’s seen as fair or rational, but because it’s familiar. It’s a reminder that pension systems evolve slowly, carrying old assumptions forward even as the world changes. Some may argue that the age-75 rule doesn’t align with modern-day working lives with some people continuing to work into their late 60s and 70s.

Even so, it remains a useful checkpoint. As you approach age 75, it can be sensible to review how your pension fits with your wider plans, particularly around death benefits and tax-free cash.

The Government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online at www.moneyhelper.org.uk or over the telephone on 0800 138 3944.

Our team of retirement specialists can provide you with free guidance to help you with your decisions. They can also provide advice and help you select products though this will have a charge.

Got a burning question you want to ask? Why not drop us a line. Click here to ask your question.

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• Read: How long could it take me to save £20k, £50k or £100k?
• Read: Retirement plan checklist: 10 years from retirement

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.