Cashing in Pensions
Information about Cashing in your Pension
Cashing in pensions early is not an option on most pension policies. Pensions are designed as a long term investment with the rationale being to provide investors with an income in retirement together with the potential for a tax-free cash lump sum.
As funds cannot be accessed until you are aged 55, pensions are not a generally a consideration for anyone wishing to raise capital for any reason before this age.
However, once you have reached the minimum age, cashing in pensions is straightforward. You can take up to 25% of your accumulated fund value as a tax free cash sum, with the remainder used to provide you with an income in retirement.
You don’t have to take your pension with the same company that you invested your pension contributions with. You can choose another company to provide your pension payments if it can offer a higher income, or a retirement income better suited to your needs.
When cashing in pensions at retirement, simply contact your scheme provider who will issue a note on the value of your pension fund, the level of annual pension this will provide, and the available tax-free cash sum.
If you are investing in a Self Invested Personal Pension (SIPP) you are entitled to the same tax benefits and pension payment arrangements associated with a personal pension or occupational pension. At retirement you can take a lump sum from your SIPP of up to 25% with the remainder used to provide an income during retirement.