Can I access or cash in my pension before I turn 55?

3 min Read Published: 22 Apr 2024

Can I cash in my pension before I turn 55?In April 2015 pension rules changed allowing investors the opportunity to access their pensions early, with several options available to those wishing to access their pension at age 55.

From the age of 55 investors can now:

  • Take part of your pension pot in cash and leave the remainder invested
  • Take some or all of your tax-free cash and buy an annuity with the remainder
  • Purchase an annuity with your total pension pot
  • Access your pension using pension drawdown

The age at which you can access your pension is due to rise to 57 from 6th April 2028.

Is it possible to access my pension before I am 55?

There are two instances when you can access your pension early, sometimes referred to as early pension release.

  • If you are too ill to work - If you are too ill to work or have an illness where your life expectancy is less than one year then you can access your pension before the age of 55, this is often referred to as 'ill-health retirement'. In the first instance, the individual should contact their pension provider direct, there is no need to use a third party. Your pension provider will explain the process and see if you are eligible.
  • You have a protected retirement date or protected early pension age - You can access your pension before the age of 55 if you have what is known as a 'protected retirement date' (sometimes referred to as a 'protected early pension age') specified in your pension plan before 6th April 2006. Individuals who have a protected retirement date would be sports professionals or other occupations in which they were unable to continue working until the normal retirement age. An individual with a protected retirement date could get access to their pension before age 55 but would still pay income tax at their marginal rate, with the first 25% of any withdrawal being tax-free.

I am moving abroad, can I access my pension early?

If you have a defined contribution pension and are currently living abroad or plan on retiring abroad you can either:

  • Leave your pension pot in the UK and continue payments into a UK bank and withdraw money abroad using a debit card
  • It is possible to move your pension pot abroad but you must make sure you transfer into a 'qualifying recognised overseas pension scheme' or there will be a tax charge. Moving your pension abroad may affect the amount of pension payable or the options available.

What are the alternatives to taking money from my pension?

Reduce your outgoings

It is worth carrying out a budgeting exercise and seeing if you can reduce your outgoings this would help with your finances until you can access your pension from the age of 55. A quick and easy way to assess your finances and spot any wasteful spending is to use a budgeting app. Check out our article 'The best budgeting apps in the UK - how to budget without even trying'. Alternatively, check out our free 'Budget planner' template.

Equity release

If you have built up sizeable equity in your home you can release some of this equity by way of a loan that will be repaid on either your death or the sale of your property. Equity release loans are typically available from the age of 55. To find out more read our article - What is equity release and how does it work?

Downsize your home

You could also release some cash by selling your current home and downsizing to a smaller one. You could then use the cash generated to supplement your income until you can access your pension. Before you decide to downsize you should consider the following:

  • the type of accommodation you would need in the future as you move into your retirement
  • how much cash you could release by downsizing

Get a loan

You could consider taking out a loan to provide you with some cash that would help your finances until you reach the age of 55 when you could access your pension.

Be aware of the scams

Whether it is your pension, investments or debit or credit card payments, you should always be vigilant and ensure you are aware of the latest scams.

Here are some signs that you should look out for:

  • have you been approached by a company or individual unknown to you?
  • have you been approached by companies offering to arrange access to your pension through selling your pension, a loan or other arrangement?
  • have you been contacted by text or email purporting to be from your bank, HMRC or other institution and asking you to provide some personal details or click on a website link?
  • is an individual or company offering unusually high returns on a new type of investment?
  • is an individual being overly pushy or aggressive, trying to get you to make a quick decision?
  • is the company that has approached you authorised by FCA?

For more information on scams read our article - Scams advice – how to avoid falling victim. Always remember, if an offer looks too good to be true it probably is.

Further reading