Can I cash in my pension in the UK?

If you have a pension plan in the UK from your time working for an old employer, you may be thinking about how you can withdraw your money from the pension plan.

If you’re thinking about cashing in your pension, there are a number of things that you will need to consider.

You can’t cash in your pension before age 55

Under pension rules in the UK, you are not able to cash in a pension in the UK until you reach age 55. It may be possible to withdraw before age 55 however only in instances of serious ill health.

The minimum pension age in the UK is due to rise to age 57 from 2028 in line with the increases in the State Pension Age.

Move your pension to a new plan

Before the age of 55, you can’t take any withdrawals, but you can move your pension to a new plan. Too often people leave their pensions in the hands of their old employers which often leads to them stagnating in outdated inflexible pension plans.

You may want to transfer to a new plan for a number of reasons, such as reducing the fees you’re paying, moving to an online plan so you can track the value of your pension easily, or move to a plan with different investment options.

If you have multiple pensions, it can make sense to combine these into one pension so you only have one plan to worry about.

There’s no tax consequences of moving your money from one pension plan to another and is not classed a new contribution.

If you think you have a pension in the UK but have lost your paperwork and don’t have the details, MyExpatSIPP can help you to find an old pension and move it into a new online plan.

Take a withdrawal and keep the rest invested

Once you reach age 55. You can take a withdrawal from your pension and then keep the rest invested in your pension which can be withdrawn whenever you want. This is known as income drawdown and you will need to transfer to a new plan in order to do this.

Many people elect to take the maximum tax free cash lump sum withdrawal of 25% and then keep the rest invested to provide a regular income throughout their retirement.

Alternatively, you can keep the rest invested without setting up regular withdrawals, perhaps only dipping into your pension fund for pay for one-off expenses like paying for an overseas trip to see the Grandkids.

You can withdraw everything from your pension in one go, however, you should bear in mind that this would result in a substantial tax bill in the UK and most likely in your country of residence too.

➤ read more about the options for withdrawing money from a UK pension plan

Cashing in your pension with MyExpatSIPP

If you transfer your pension to MyExpatSIPP, we can pay withdrawals from your pension from age 55. You can take the 25% tax free lump sum, keep some invested, set up a regular income or take the whole lot.

The choice is yours and all withdrawals can be arranged through your online account so you won’t need to worry about sending any forms to the UK.

We can also pay any withdrawals directly into your local bank account. Unlike most pension providers, we DON’T require withdrawals to be paid into a bank account in the UK.

We can also help you to minimise any tax you pay in the UK by using one of the UK’s double taxation treaties.

Contact us to see how we can help you to withdraw money from your pension in the UK and reduce the tax you pay.

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