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        0808 189 0463

        Updated: April 16, 2024

        Can I Cancel My Personal Pension?

        Thinking of cancelling an existing personal pension? Read on to find out what happens if you wish to proceed.

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        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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        Cancelling your personal pension before you reach retirement age is a major decision which could have a severely negative impact on the income you have to live on when you stop working.

        If you are 55 or over, the decision becomes a lot more straightforward. However, since pensions are a regulated financial product with strict rules about how they can be used it’s wise to seek professional advice before taking any action.

        This guide will help you understand some of the key elements about your choices when it comes to closing or cancelling a personal pension.

        Personal pension cancellation – what are your rights?

        When you set up your personal pension you will have a cooling-off period. This will be for a minimum of 14 days, although it could last 30 days or longer. When you establish your pension, you will be notified of how long the cooling-off period will last. This is the best time to change your mind.

        Inside this initial period, you can cancel your pension plan, get any money you have paid back and no further payments will be collected. If you decide to cancel your personal pension scheme inside the cooling-off period there will be clear instructions of how to let the pension provider know in the details you were given at the time you set up your account.

        You should be cautious if your personal pension plan includes a transfer from another scheme. It may not be possible to reinstate the pension back with the original provider and you could be left looking for a provider willing to accept the pension or have to reapply to the pension you were cancelling.

        Can I stop paying into my personal pension?

        Yes. Following the official cooling-off period, or cancellation period, as it is also referred to, you cannot cancel the pension plan, but you can choose to stop paying contributions or transfer it to another pension scheme.

        If you have a personal pension and want to cancel it or make other arrangements, get in touch for a free, no obligation chat and we’ll connect you with one of the pension experts we work with.

        All the experts we work with are independent financial advisors with access to pension providers across the entire UK. They will answer your questions and help you understand all your options when it comes to planning for your retirement.

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        Can I close my personal pension?

        If your pension is established and you’re beyond the cooling-off period, closing your personal pension before you reach age 55 is possible, but highly inadvisable. Pensions are a highly regulated financial product with strict rules and regulations.

        By closing your personal pension ahead of retirement age, your whole pension fund will be taxed at 55%, regardless of your income tax band.

        If you are under 55 and want to close your personal pension this would be classed as cashing in, unlocking or releasing your pension. Whatever the label, doing so comes with high costs.

        Instead of closing your pension you could cease making contributions, often without penalty, or transfer your pension pot elsewhere.

        How to close your pension plan

        If you want to close your personal pension and are under 55 you should seek professional advice before taking any action. If you are over 55 and ready to close your pension you have the option to take the whole amount as a cash lump sum. However, only 25% of this sum will be tax free.

        The remaining cash taken will be taxed as income. If the total amount you take pushes you into a higher tax bracket, you may be charged more tax than you might be used to, even if you are lower or basic rate taxpayer.

        You can also close your personal pension and use the funds to ensure your retirement income by:

        • Buying an annuity which will provide you with a regular income for life. The amount of income you could get will vary depending on the funds available, how long the insurance company expects you to live and how long they predict the annuity will need to pay out.There are different annuity products available and you should find one which suits your needs, circumstances and available funds. You’re not obliged to buy through your pension company, so it’s wise to look around for a deal to suit your requirements.
        • Invest in a pension drawdown fund which allows you to withdraw funds or buy a short or fixed-term annuity which will provide regular payments for up to five years. You can also make payments into a drawdown fund, although you’ll be taxed on any contributions over £4,000 in one calendar year.

        If you want to close your personal pension get in touch for a free, no obligation chat and we’ll match you with one of the expert pension advisors we work with.

        They will be happy to answer your questions and find the pension solution most likely to provide the best level of retirement income available, taking all your circumstances into account.

        Can I sell my personal pension plan?

        If you are considering options like selling your personal pension, chances are you’re looking for a cash sum before retirement. While it is not possible to sell your pension, you can release cash from your pension early. This decision should not be taken lightly since it can prove to be a costly exercise, incurring high tax charges.

        It’s likely you’ll also incur fees from your pension company, if not an external company who could charge as much as 30% for helping you unlock your pension.

        Deciding to sell your pension or releasing your pension should not be taken lightly and requires careful consideration of all your options, and alternate solutions. Before you make any decision, talk things through with one of the expert advisors we work with…

        Speak to an expert

        Call 0808 189 0463 or make an enquiry for a free, no obligation chat. We’ll match you with one of the pension experts we work with, ensuring that they have experience of helping other customers in similar circumstances.

        All the experts we work with are independent financial advisors with access to pension providers and insurance companies across the entire UK.

        They will be happy to talk you through all your available options and help ensure you make the best decision to provide an income for your retirement.

        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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        Richard Angliss

        Richard Angliss

        Finance Expert

        About the author

        Richard Angliss has made a career in financial services which stretches over 40 years.

        His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

        For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

        At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

        With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

        He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

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