For most, when you can access your pension depends on the type of pension and your age.
In this article, we'll look at when you can start withdrawing your pension.
As a general rule, you won't be able to withdraw money from your pension until you reach retirement age. For most, the retirement age for private pensions is 55, rising to 57 in 2028. This includes defined contribution workplace pensions.
Also, you may have set a specific retirement age on your private pension when you originally set it up. This helps your pension provider know when to contact you about your options for retirement.
Some defined benefit workplace pensions may have set retirement ages specific to the scheme, so it’s best to check your paperwork or give your pension provider a call to confirm when you can access your savings.
You'll need to wait a little longer for your State pension. If you’re eligible, you start to claim this at 66 (for 2020/21), increasing to 67 by 2028, and 68 by 2039. Visit this handy timetable from the government for more on when you'll get access to your State pension.
If you're not sure, it's worth reaching out to your pension provider to check how your plan works.
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If you'd like to retire early, under certain circumstances, it is possible to withdraw your private pension before the age of 55. However, this can end up being costly.
It isn't against the law to withdraw from your pot before your retirement age but you may pay up to 55% tax on your withdrawals.
The main caveat to withdrawing your pension early is your health. If you need to retire early due to ill health, you may be able to access your pot before 55.
You may be able to access your pension early if you’re seriously ill.
Ill health retirement is sometimes referred to as ‘medically retired’ - this is when your pension scheme allows you to withdraw your savings before the age of 55 due to sickness, disability or a serious medical condition. It generally means:
There may be specific terms set out by your pension scheme regarding what conditions entitle you to access your pension early. If you want to request ill-health retirement, you’ll likely have to provide evidence and you may be restricted on which retirement options you can choose. You'll also need to meet some strict conditions outlined by HMRC.
You can also claim your pension early under Serious Ill Health rules.
If your life expectancy is less than one year, you may be able to take the whole of your pension pot early as a tax-free lump sum. Again, you'll need to supply evidence to your pension provider.
Early pension release is a common ruse used by scammers. You should be wary of anyone who claims they can help you access your pension early - you risk losing money, as well as incurring fines from HMRC.
If you suspect you’ve been approached about an early pension release scam, you should report it to the Financial Conduct Authority by calling their consumer helpline on 0800 111 6768 or by visiting FCA.org.