Can I take money from my pension at 55?

You can take money from your pension at 55 as long as you have the right type of scheme:

  • The first 25% would be tax free
  • After the first 25% you take, any withdrawals would be taxed as income
  • Taking money early from your pension will leave you worse off in retirement

In almost all cases you cannot take money from your pension before the age of 55. If a company says you can, it’s probably a scam.

(Tax treatment depends on your individual circumstances and may be subject to change.)

Why are so many people taking money from their pension early?

Thousands of people across the UK are taking money from their pension pot early to tackle a current pressing need or opportunity. In our experience some of the most common reasons include:

  • Tackling a long-standing financial commitment such as a mortgage, loan or credit card
  • Supporting a family member with a big life event such as a wedding or deposit
  • Making important upgrades to the house

These are just a few examples and you might have a completely different reason for wanting to take money early from your pension. The big thing to consider is the impact this could have on your life further down the line.

Is taking money from your pension the right thing for you to do?

To answer this question, you first need to balance the importance of what you currently need with what you might need in the future.

Withdrawing pension money early is not right for everyone as it will leave you worse off in retirement. On the flip slide, for many people considering this option, resolving their current need can have a lasting positive impact on their future.

It is not an easy decision to make. And that is why many people seek advice from a regulated financial adviser, someone who knows pensions inside out and who will do all of the hard work for you.

How do you take money from your pension early?

This all depends on the type of pension, or pensions, that you have. Sometimes you can make the arrangements direct with your provider. In many cases, though, you must take financial advice before withdrawing any money early from your pension. This regulation is in place to protect people as, depending on your circumstances, transferring out of certain schemes might not always be in your best interests.

We have already helped thousands of clients to withdraw the money they need, and for many others we have recommended they are best off leaving their pension savings exactly where they are. The good news is that our initial investigation into your pension will not cost you a penny and any advice charges are confirmed in writing before you have to make a decision to proceed. This means you can walk away better informed with nothing to pay.

Can I release money from my pension if I am under 55?

Generally you must be aged 55 or over to release money from your pension. In very rare circumstances, such as extremely poor health, then you may be able to take money from your pension before you are 55.

Can I take money early from all types of pensions?

You can take money from any private pension and most employee schemes, although final salary (also known as defined benefit) schemes may need to be transferred to a personal scheme first. You cannot use pension release to take money early from the State Pension or unfunded public sector schemes which cover organisations and professions including the NHS, teachers, armed forces, civil servants, firefighters and the police.

What other options do I have at 55?

At 55, you can:

  • Take just your tax-free cash
  • Take more than your tax-free cash
  • Take all your pension in one go
  • Buy an annuity
  • Leave your money invested
  • Mix and match these options

To find the right option for you, the best place to start is by asking a regulated financial adviser to check your pension. They can then show you the best way to make the most of your money now while making sure your retirement needs are covered.

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We can help you to make the best possible decisions when it comes to your pension.

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.
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