Can I cash in my pension before the age of 55?

Here at Tideway, we get asked a range of questions relating to pension advice and pensions transfers and one of those is: can I cash in my pension before I’m 55?

The answer is fairly straightforward, but there are some exceptions as well as some things to bear in mind which are explored in this article.

Can I cash in my pension before 55?

In the majority of circumstances, you won’t be able to cash in your pension or take any money from your pension before you reach 55. However, there are some very rare circumstances in which your pension provider might permit you to take some or all of your pension pot.

Under which circumstances can I access my pension early?

In the UK, you will only be able to take your pension before the age of 55 if you meet a special set of conditions. Otherwise, this withdrawal is treated as an unauthorised transaction and you will be charged extremely high fees.

The first is if you have a serious illness which means that you can no longer work. Each pension provider will have a different definition of ‘ill health’ which will influence whether you can access your pension pot early and the associated rules. 

In select cases of serious illness, you might be able to take the whole of your pension pot tax free. However, this is only if the following criteria apply to you:

  • You are expected to live for less than a year
  • Your pension pots are worth less than the lifetime allowance of £1,055,000.

The only other circumstance under which you can access your pension money before 55 is if you had a ‘protected pension age’ specified in your pension plan before the 6th April 2006. Very few people will have had a protected pension age and this must have been granted to you before the above date.

Avoiding pensions scams

There are some pension scams out there who will take advantage of people who are looking to cash in their pension before the age of 55 so it’s important to be aware of this. If you need professional advice on your pension at any stage, make sure to consult a financial adviser who is regulated by the Financial Conduct Authority (FCA).

What about cashing in my pension after age 55?

Once you reach your 55th birthday, you are free to withdraw 25% of your total pension pot tax-free as a lump sum. This percentage is the same regardless of how small or large your pension fund is. You are able to cash in the remainder of your pension, but this will have tax implications. If you are considering transferring your pension, it is important to use a specialist pension adviser, as they will be able to help you realise the best options for you.

Further information

To find out more please do contact one of our advisers on:

Tel: 020 3143 6100

Tideway Investment Group comprises the following entities: Tideway Investment Partners LLP and Tideway Wealth Management Limited. Tideway Wealth Management Limited is an appointed representative of Tideway Investment Partners LLP, which is authorised and regulated by the Financial Conduct Authority. FCA number: 496214.

Tideway Wealth Management Ltd
107 Leadenhall Street
London EC3A 4AF

+44 (0)20 3143 6100

© Tideway Investment Group 2021