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        Updated: April 17, 2024

        When Can I Cash in a Frozen Pension?

        Everything you need to know about frozen pensions, including what they are, how to find them and how to access the money you have tied up in them

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        Moving jobs from one employer to another is much more routine these days. This activity can frequently leave behind a trail of dormant pensions (or “frozen” pensions, which is the informal term) and can create a conundrum as to what you’re able to do with these savings.

        In this article we look at what options are available for any frozen pensions you may have and when you can make a withdrawal.

        What if I move jobs?

        If you’re under the age of 55 and are still working, cashing in a frozen pension is not allowed under any circumstances. This would be classed as an unauthorised payment and will give rise to a large tax penalty levied by HMRC usually equating to a 55% charge of the withdrawal amount.

        It’s not unusual to accumulate a number of frozen pensions during your working life. It’s important to remember that the funds do not remain static as, perhaps, the term “frozen” suggests. Your fund can still grow in value even though you’re no longer making additional contributions.

        If you find yourself with one or more frozen pension plans due to a job switch, the options available to you are:

        • Leaving the funds where they are so they continue to grow in line with the performance of the underlying assets
        • Transferring the frozen pension funds across to your new scheme, if appropriate

        Both of the above options still carry an element of risk. Most pension investments can fall as well as rise and fees applied to pension pots can be higher with one provider than with others. There will also be fees to pay when transferring from one scheme to another.

        If you’ve recently moved jobs and would like to know what the best options are for your frozen pension get in touch with us and we will arrange for an advisor we work with to speak with you directly.

        Can I release cash and transfer it to another pension scheme?

        Yes this is certainly possible if you’re in a defined contribution scheme. If you join another scheme and are happy with both the benefits it offers and how it is performing, you can consider releasing any frozen pension funds you previously contributed to and transfer them into your current scheme.

        You would need to check with the administrators of both schemes to confirm that this is possible. It’s also important to understand the impact any charges or fees applied. If they are excessively high, it could have a negative impact on the overall value of your frozen pension fund over time.

        In certain circumstances it may not be appropriate or indeed possible to transfer your frozen pension, for example, if you are a previous member of an unfunded pension scheme such as the NHS pension scheme. Not all frozen pensions are workplace schemes, personal pensions can also be frozen.

        Pension transfers can be quite a daunting aspect of financial planning. It is strongly recommended to take professional advice (in some circumstances it is actually a legal requirement) before you make any final decisions.

        If you make an enquiry we can arrange for a pension transfer specialist to contact you to discuss further.

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        Can I cash in if I retire sooner than planned?

        If you are over the age of 55 and want to retire sooner than you originally planned then, yes, you have the option of cashing in your frozen pension in order to provide an income.

        All defined contribution schemes (such as personal pensions or SIPPs) in the UK are accessible once you reach 55 years of age. Generally, there are two options available which can provide you with a retirement income using your frozen pension funds:

        If your frozen pension funds are not within a defined contribution (DC) scheme you may need to transfer them across to a type of pension that is a DC scheme in order to access these savings.

        If you do want to look at transferring a frozen pension that is not a DC scheme in order to start receiving income before your planned retirement date you need to seek advice beforehand.

        Make an enquiry and we can arrange for an expert to get in touch to provide further guidance.

        What if you become self-employed?

        Yes it’s possible. If you’re over the age of 55 you can start to access your frozen pension funds on the same basis as outlined in the previous section, regardless of your employment status. You may still want to work in some capacity and supplement income by working for yourself even as a retiree.

        If you’re under the age of 55 and have recently commenced self-employment, cashing in a frozen pension early would not be permitted.

        Can I withdraw money if I can no longer work due to ill health?

        If you’re no longer able to work due to a long-term illness or disability there is the possibility of taking benefits from a frozen pension early, even before you reach 55. This is what is known as an ill-health pension.

        Each pension scheme’s definition of ill-health will dictate the circumstances where a frozen pension can be cashed in.

        Can I take it as a lump sum under these circumstances?

        If you are diagnosed with serious ill-health (usually where the diagnosis is terminal within 12 months) you may be able to release any frozen pension plans you have in the form of a tax-free lump sum.

        Can it be cashed in before the age of 55 other than due to ill-health?

        If you had a ‘protected retirement date’ specified in your pension plan before 6 April 2006 you can access any frozen pension funds on this date even if it is before the age of 55. A typical example of this would be for professional sports people. Other than this, cashing in your frozen pension would be ill-advised.

        How to get your money out

        The process for how to release funds from a frozen pension will vary depending on the type of pension you have.

        If you’ve decided to transfer a frozen pension to your current scheme the first thing you need to do is to contact your previous provider and request a final statement of entitlement, making them aware of your intention to move the funds.

        In certain circumstances you may be required, on legal grounds, to seek professional advice before the provider is able to release the funds.

        Depending on the type of pension scheme your frozen pension plan falls under you will then usually have a set timescale (up to three months for final salary schemes, for example) to complete the transfer.

        Releasing money from a frozen pension can be tricky. If you get in touch we can ask an advisor we work with to help you through this process.

        Can I cash in my “frozen” company pension if my previous employer goes out of business?

        If a company you worked for goes into administration any frozen pension benefits you are entitled to should still be protected by either the terms of the Pension Protection Fund (PPF) or, in the case of a defined contribution scheme, set aside and unaffected by this situation.

        You would not be able to cash in your frozen pension under the age of 55, regardless of whether a previous employer remains in business or not, without incurring significant HMRC tax penalties as it would still be classed as an unauthorised payment.

        How can I take money out if I don’t have any information?

        If you have one or more frozen pensions with previous employers but have misplaced the details of these plans, don’t panic! There is a special service operated by the UK government designed to deal with this situation called the Pension Tracing Service.

        In order to retrieve the details of any pension funds you have invested, all you need is either the name of your former employer or the provider. You can use the service online, via telephone or post.

        Can I release money if I move abroad?

        Yes it’s possible if you’ve reached the age of 55. However, if you are below this age and have moved abroad to work, for example, you would not be able to release any funds from your frozen pension without incurring significant HMRC tax penalties which would be applied to the fund regardless of your residency.

        Speak to an expert

        If you have one or more frozen pension plans and would like to speak with an expert in order to explore further the options available to you, call us today on 0808 189 0463 or make an enquiry here.

        Then, just sit back and relax while we do all the hard work of finding the advisor with the right experience for your specific needs.

        Ask A Quick Question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.

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        Tony Stevens

        Tony Stevens

        Finance Expert

        About the author

        Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

        Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

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