When can I take my pension?

Simply put, a pension is intended to provide something to live on during retirement. This can be in the form of a regular income with an annuity or income drawdown, or ad-hoc withdrawals as you need them. Nonetheless, it’s possible to access a pension before retiring.

“What if I need to take some of my pension now?”

Depending on some key factors, you may be able to. If you are aged 55 or over and have a qualifying pension – private, company or funded final salary – then you should be able to cash in your pension.

It’s important to seek regulated advice before removing money from your pension though, as it is not always the best decision. If you have no other retirement provisions and want to empty your fund to be frivolous, you may want to reconsider.

What reason do I need to access my pension?

If you meet the conditions above then you can access your pension for any reason, and 25% can be taken tax-free – this is known as pension release. This can be taken as a single lump sum while the rest remains invested, and common uses for this are tackling debts. You may decide that it would help clear the mortgage or pay for your daughter’s wedding. People spend pension release differently, with reasons also including home improvements and helping children with tuition fees and house deposits.

Pension release is not a loan, so there is no interest and nothing to repay.

Do I need to reach state retirement age before taking my pension?

No, the state retirement age is the minimum age you need to be in order to claim the State Pension, and has no bearing on when you are allowed to retire.

Are the rules the same for the State Pension?

The State Pension is an income provided to citizens above a certain age by the government, and the rules are different to private pensions. For example, it is not possible to withdraw ad-hoc lump sums. However, for each year that you defer the State Pension it currently grows by 5.8% a year.

Are there risks with cashing in my pension?

Potentially, yes. Being the victim of a scam is a particular risk, especially as the new pension rules make it easier to access the money. The minimum age to access a pension is 55; accessing it at a younger age is known as pension liberation and can carry harsh penalties. The scheme itself may have a fee of over 20% of the amount you remove, and HMRC can demand up to 55% of the money that has been taken from the pension. HMRC can also take up to 55% of the fee charged by the scheme, plus interest. As an example, if you took £20,000, you could have the following scenario:



Scheme fee

£4,000 (20%)
HMRC tax £11,000 (55%)
HMRC tax on scheme free £2,000 (55%)
Interest Variable
Total spent, before interest is deducted £17,200 (86%)

Remaining sum, before interest is deducted



 With this example, you have lost 86% of your released money in fees and are left with just 14%.


Even once you are over the legal age of 55, you need to be aware of scams because you may be approached by companies that want to invest your pension money into unregulated investments. These could be particularly high risk.

Call 0800 304 7288 for a friendly chat about your pension

Important information

*Taxation is based on individual circumstances. The above is our understanding of current tax rules and is subject to change in the future.

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section: https://www.portafina.co.uk/whats-new

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