06 June 2024

Yes, you can withdraw money from your pension pot before you’re 55, but only if you have severe health problems or work in certain kinds of job. Be very wary of anyone who says it’s possible to take money out of your pension under any other circumstances. 

In this article we talk you through how early withdrawal works and flag up some scams to look out for. 

When can I take money out of my pension?

You can usually only take money out of a workplace or personal pension once you’re 55 or older (rising to 57 from April 2028). 

You can’t start claiming your State Pension before you reach State Pension age. That’s 66 right now, rising to 67 and then finally to 68 by 2028. But depending on your needs and circumstances you might be able to access other state benefits.

Reasons for accessing your pension before 55

You might be able to withdraw from a pension before 55 (or 57 from April 2028) if you either:

  • Have health problems that leave you permanently unable to do your job. Find out more in our Early medical retirement due to ill health article.
  • Are in a scheme with a protected retirement age (PRA) or protected pension age (PPA) benefit. They’re usually for people in dangerous jobs, like firefighting or the military, or sports people. If you’re not sure whether or not you have a PRA or PPA benefit, check with your scheme provider or administrator.

The financial challenges of pension withdrawal before 55

Withdrawing money from your pension before you’re 55 creates several financial challenges:

  • The money you pull out has less time to grow
  • You’ll have a longer wait until your State Pension kicks in and helps support you
  • Your pension pot has to stretch to cover more years in general

Accessing your pension also triggers the Money Purchase Annual Allowance (MPAA). That brings the total amount you can pay into any of your pensions in the future right down, currently shrinking it from £60,000 to just £10,000 each tax year.

Is it worth taking money out of my pension early?

That depends on your personal needs and circumstances. But it’s always worth looking into other ways of balancing the books before you decide on an early pension withdrawal.

If you’re a homeowner you might be able to downsize or draw on other financial products. For example, if you’re aged 50 plus, there's our Payment Term Lifetime Mortgage (PTLM). And if you’re dealing with serious health issues there may be state benefits that could help you.

Taking early medical retirement?

Retiring early due to ill health could mean accessing your pension pots sooner than you planned. Bringing them together can help you manage your pension. Learn more about pension transfer and consolidation.

What scams should I watch out for? 

Keep a very careful eye on anyone who tells you they can help you withdraw your pension early. Unless you fall into the very specific circumstances we’ve described above, they’re wrong and almost certainly not to be trusted.

  • Scams called pension liberation schemes can charge up to 30% in fees and leave you with a 55% tax charge – you can end up with as little as 15% of your pension pot.
  • Watch out for cold callers offering early withdrawal or any other kind of pensions advice! Cold calling with financial advice is illegal, so anyone doing it is very deeply dodgy.
  • Find out more at our Investment and pensions financial scams page and over on Money Saving Expert’s Pension liberation scams page.

What should I do next?

If you’re thinking about cashing in large or small pension pots under 55, and are eligible, it’s important to seek guidance or advice:

  • If you’re aged 50+, or are younger than that but can take your pension early due to ill health, you can book an appointment with Pension Wise for free, impartial guidance.
  • You can talk to a financial adviser at any age, though you’ll probably have to pay for their advice. If you don’t already have one, find one at Unbiased.

They’ll help you think through your longer-term options – for example, certain types of retirement income product might become available once you turn 55+. And they’ll also talk you through the tax implications of any pension pot choices you make.

It’s also very useful to have a clear idea of how much you’re spending just now and what your retirement income needs might be:

We hope that’s helped answer all your “Can you withdraw your pension before 55” questions.

FAQs

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