{"id":453308,"date":"2022-07-12T17:30:17","date_gmt":"2022-07-12T16:30:17","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=453308"},"modified":"2026-01-29T08:20:54","modified_gmt":"2026-01-29T08:20:54","slug":"taking-money-from-your-pension","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/pensions\/taking-money-from-your-pension","title":{"rendered":"Taking money from your pension"},"content":{"rendered":"

When you first start saving into a pension, retirement might seem a long time away. But as it draws closer, your attention will turn less to putting money in to your pension, and more to how to get your money out. Whether you\u2019re wondering about the state pension, a workplace pension, or a personal pension, we explain when and how you can get your hands on your pension savings.<\/p>

When can I start taking money from my personal or workplace pension?<\/h3>

The earliest you can usually start taking money from your personal or workplace pension without incurring heavy tax penalties is age 55. This is due to rise to age 57 from 2028.<\/p>

You don\u2019t have to start taking your pension at age 55, though. Many people choose to wait until a more traditional retirement age of 60 or 65. Some don\u2019t start taking their pension until even later.<\/p>

Are there different rules for workplace pensions, personal pensions and SIPPs?<\/h3>

Yes and no. If you have a defined contribution<\/a> (DC) pension, you can typically access the money in your pot whenever you like from age 55. Defined contribution pensions include personal pensions<\/a>, self invested personal pensions<\/a> (SIPPs), and some workplace pensions.<\/p>

However, if you have a defined benefit workplace pension<\/a>, the default age for starting to receive pension income is usually a bit higher. Defined benefit pensions pay you an income based on a proportion of your salary while you were working for the company. The scheme might set your default retirement age at 60 or 65, for example.<\/p>

You may be able to change this default so you can start taking income earlier. However, your monthly payments will be reduced as you\u2019ll likely be receiving income for a longer time. Of course, you can also choose to start taking your defined benefit pension later than the default age, which may give you a higher income.<\/p>

Can I ever take money from my personal or workplace pension before age 55?<\/h3>

There are only a couple of circumstances in which you might be able to receive money from your pension before the age of 55 without incurring eye-watering tax penalties.<\/p>

  1. Type of scheme.<\/strong> If you joined your pension scheme before 6 April 2006 and the scheme allows an earlier retirement date. This usually applies to professions where careers tend to end at a younger age, such as professional sport.<\/li>
  2. Medical reasons.<\/strong> If you have poor health or a serious medical condition that means you need to retire early. This is sometimes called medical retirement. Different schemes have different rules, so you\u2019ll need to check what rules apply to your particular pension. Some pension providers require a doctor or registered practitioner to confirm your medical status.<\/li><\/ol>

    If serious illness means that you\u2019re expected to live less than a year, you may be able to withdraw your full pension as a tax-free lump sum.<\/p>

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    Our expert says: What happens if I take money from a personal or workplace pension too early?<\/div>\n
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    \"It\u2019s not illegal to take money out of your pension before the age of 55 (or 57 from 2028). But if you do, and no special circumstances apply, HMRC is likely to regard any withdrawal as an unauthorised transfer. If so, you\u2019ll be charged up to 55% tax on the amount you take out.<\/p>

    Reputable pension providers are unlikely to support this, which means you\u2019ll probably need to use an unregulated third party. While it may describe what it\u2019s doing in appealing terms such as \u201cpension liberation\u201d or \u201cearly pension release\u201d, in practice many such firms are little more than scammers that will charge you a high fee on top of the tax bill you\u2019ll face. Plus, with many pension liberation scams<\/a>, the investments that your money could be placed in are likely to be fraudulent.\"<\/p>\n\n <\/div>\n <\/div>\n\n

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    Are there any pension scams I should be aware of when trying to take money from my pension?<\/h3>

    Sadly, fraudsters won\u2019t think twice about trying to part you from the savings you\u2019re relying on to fund your retirement. They see the money held in pension pots as rich pickings. After all, if you\u2019ve been saving into a pension your whole life, your pot could be one of your biggest assets.<\/p>

    Scammers may try their luck at any point and try to trick you into transferring your pension into high-risk and probably bogus schemes. But one of the times to be most aware is in the run-up to age 55.<\/p>

    So-called \u201cpension liberation\u201d scams are when fraudsters try to persuade those approaching retirement to access their funds before the rules allow.<\/p>

    Fraudsters may approach you via a cold call or an email. Some may even go as far as setting up bogus websites that you might come across while researching your legitimate options to access your pension.<\/p>

    The fraudster will indicate that they know of legal loopholes that will allow you to circumvent the usual rules about unauthorised pension transfers. In exchange for a hefty fee, of course; as much as 30%, in some cases. They\u2019ll claim that the loopholes that they know of will let you access your funds early without having to pay HMRC\u2019s high tax bill.<\/p>

    They\u2019re lying. The legal loopholes don\u2019t exist. As soon as HMRC finds out about the unauthorised transfer, it will hit you with a 55% tax bill. Even if you didn\u2019t realise you\u2019d broken the tax rules.<\/p>

    Plus, the fraudster may try to persuade you to invest the cash you\u2019ve \u201cfreed up\u201d into a high-risk, unregulated investment fund, promising it\u2019ll give you high returns. In reality, such a scheme could end up losing you what little you had left after fees and tax.<\/p>

    So, if anyone contacts you out of the blue offering to help you \u201cliberate\u201d your pension before you reach the age of 55, it\u2019s almost certainly a scam.<\/p>

    Do I have to take a personal or workplace pension as soon as I retire?<\/h3>

    No. If you have enough income from other sources, such as savings or income from renting out a property, you don\u2019t have to take your pension when you retire from work. In most cases, you won\u2019t start automatically receiving a pension, so you won\u2019t need to do anything to delay access.<\/p>

    There may be an exception to this rule with some defined benefit workplace pensions. These might automatically start paying out when you reach a certain age. If this is the case, you\u2019ll need to proactively request a delay.<\/p>

    When do I start getting my state pension?<\/h3>

    The age at which you can start receiving the state pension<\/a> is later than you can access any personal or workplace pension. Your state pension age depends on when you were born.<\/p>

    At the moment, the age is 66, although this is due to rise to 67 between 2026 and 2028. It\u2019s currently scheduled to rise again \u2013 to 68 \u2013 between 2044 and 2046, though this is subject to review.<\/p>

    You can check your state pension age based on your specific birth date using the government\u2019s state pension calculator<\/a>. The income you eventually receive depends on a number of things, including when you joined the scheme and your National Insurance contribution record.<\/p>

    Is it possible to take my state pension early?<\/h3>

    We\u2019re afraid not. Unlike personal and workplace pensions, there are no special circumstances (such as ill health) that might entitle you to receive your state pension before your official state pension age.<\/p>

    Can I delay taking my state pension?<\/h3>

    You can indeed. While it might seem crazy to delay receiving income that you\u2019re entitled to, there can be benefits to doing so.<\/p>

    Firstly, if you\u2019re already receiving decent income from other sources \u2013 such as employment or other pensions \u2013 taking the state pension could push you into a higher tax bracket. If you delay taking it until your income from other sources goes down, this could help keep your tax bill lower.<\/p>

    Secondly, deferring your state pension could increase the payments you get when you decide to claim it. For every year you defer, you\u2019ll get an increase in state pension income of 5.8%.<\/p>

    You don\u2019t have to do anything to defer the state pension. It will automatically be deferred until you actively claim it.<\/p>

    What are the pension freedom rules?<\/h3>

    The term \u201cpension freedom\u201d is the term commonly used for rules that came into force in April 2015. These rules dramatically changed the way in which defined contribution (DC) pensions can be accessed. Previously, most people with this type of pension had little choice but to buy an annuity with their pension savings.<\/p>

    Since 2015, you can access the funds in your DC pension pot in a number of ways, as we outline below, and choose when to do so from the age of 55 (or 57, from 2028). These changes became widely known as \u201cpension freedoms\u201d, because they freed up pension-holders\u2019 choices of how to access their money.<\/p>

    How can I take money from my pension?<\/h3>

    That depends on the type of pension you have. Some are more straightforward than others \u2013 here\u2019s a quick summary of how different types of pension usually work.<\/p>

    How can I take money from the state pension?<\/h4>

    To start receiving your state pension income, you will need to proactively contact the Pension Service<\/a> to claim it. Once you claim your state pension, you will receive it as regular income into your bank account \u2013 usually every 4 weeks. Find out more about the state pension, including how much you\u2019re likely to receive, in our full state pension guide<\/a>.<\/p>

    How can I take money from a defined benefit workplace pension?<\/h4>

    Like the state pension, defined benefit pensions pay out a fixed, regular income when you retire, directly into your bank account. How much you\u2019ll get is based on a proportion of your salary when you were at the company, and is calculated based on the years you\u2019ve worked at a company.<\/p>

    Under pension freedom rules, you can usually take part of a defined benefit pension as a tax-free lump sum at any point from the age of 55. Ask your provider how much you can take, as rules can vary depending on the scheme. And bear in mind that taking this chunk out of your pension pot will reduce your annual income.<\/p>

    How can I take money from a defined contribution pension?<\/h4>

    This is where your choices get a bit more elaborate, as the pension freedom rules opened up your choices of how to access defined contribution pension<\/a> pots.<\/p>

    Here are your main options for taking money out of a DC pension:<\/p>