Taking Your Personal Pension Early

Most Britons will be able to access their personal pension pot from the age of 55, though this is set to increase to 57 by 2028. However, you may be able to access your pension at an earlier age, depending on your circumstances.

In this article, we look at how you can access your pension pot earlier if you need to be retired before you can do so, what happens if you take your pension early even if you don’t qualify, and more.

Can I draw my personal pension early?

Provided you have access to Pension Freedoms, you may be able to access your 25% tax-free lump sum and draw down your personal pension before you turn 55. There are specific circumstances in which you can take your pension early without incurring any large fees, and while it’s not illegal to access your funds before you reach this age, bear in mind that you could run short on funds for your future retirement.

It may be in your best interest to work out how much income you’ll have if you decide to take out a portion of your funds before you reach 55.

For more information about how taking out your pension early could affect you, speak with an advisor. We only work with highly professional experts regulated by the Financial Conduct Authority (FCA), so they can provide you with the best advice possible.

Ill-health

Also known as an ‘ill-health’ pension, some people may be able to access their personal pension benefits and retire earlier if their ill-health means that they are unable to work and support themselves financially. However, whether you can take your pension early due to ill-health will depend on your pension scheme’s terms and conditions, and how they define what ‘ill-health’ is.

For those in serious ill-health (such as terminal illness), taking out your whole pension pot as a lump sum may be a viable option, and it will be tax-free if you’re under 75 (so long as you have enough available lifetime allowance).

Protected pension age

If you purchased a personal pension scheme with protected pension age before April 2006, you may have the right to access your funds before you reach 55. They were typically offered to those with ‘prescribed occupations, such as sports professionals and members of the Reserve Forces.

You would need to get in touch with your scheme provider to see if you’re eligible for this.

Unfortunately, if you do not have protected pension age on your policy, you cannot draw your funds early. However, be aware of ‘pension liberation’ communications from scammers claiming that they can release your pension before 55.

Can I access my personal pension before retirement?

Yes, you don’t have to retire in order to access your personal pension pot, provided you have access to Pension Freedoms. You can still work and grow your pension pot even after taking out your 25% tax-free lump sum and/or draw down an income from it. For example, you can access your pot at 55, then retire a few years later.

If you’re looking to draw down an income from your personal pension to tide you over a period of ill-health but plan on going back to work, then you may be able to claim National Insurance credits to help fill any gaps in your National Insurance record for your future State Pension.

Can I access my State Pension early?

Unfortunately, you cannot access your State Pension early. The age you can take out your pension will be different depending on when you were born and will also determine whether you’re eligible for the basic State Pension or the new State Pension. Currently, the full amount is £175.20 per week, but your eligible amount will be based on your National Insurance record.

To find out how much State Pension you could be entitled to and at what age, use this tool from the government.

What happens if I take money from my pension anyway?

If you aren’t eligible to take out your personal pension before 55, each payment taken before this age will be classed as an unauthorised payment – and you could face a tax charge of 55% plus any other charges from your provider, which could be up to 30%.

Taking out your pension pot early isn’t a decision which should be taken lightly. By speaking with an expert, they can help walk you through your options and see which solution is the most viable. Make an enquiry to get started.

Speak to an expert

While you have the choice to access your pension pot earlier than 55, you may want to think about how doing so will affect you throughout your retirement.

The longer you can leave your funds to accrue in your pot, the more income you could potentially receive – which is why it’s so important to find the right personal pension scheme for you.

The experts we work with have the industry connections to find the best deals based on your circumstances and can offer you tailored advice to help plan for your retirement.

Make an enquiry or call us on 0808 189 0463 and we’ll match you with an expert for a free, no-obligation chat.