Specialist FCA Regulated Advice
Can I cash in a defined benefit pension early?
If you are aged 55+ and not currently paying into or receiving your defined benefit pension, you can cash in 100% of your pension early as a cash lump sum – up to 25% Tax Free.
Case Study: Cashing in a defined benefit pension early
The National Grid Pension Scheme is known as a defined benefit pension scheme and is therefore an extremely good pension with valuable benefits.
- When you reach retirement age 65, the National Grid scheme will pay you a regular pension income for the rest of your life (subject to Income Tax), which will increase each year. You may have the option of receiving a reduced pension in exchange for a tax free lump sum.
- If you die at any time only a ‘financial dependent’ such as a spouse would receive any money back and even then it will only be a fraction of the pension income you would have received.
Mr S L from London
Mrs L, age 55 from London, needed to clear debts in order to save several hundred pounds a month in repayments; these included credit cards and a loan. Her plan was to semi-retire by reducing her working hours and then fully retire in the next 4-5 years. She also wanted to give her daughter an amount towards a kitchen for her new home.
She was unable to take her benefits direct from the National Grid scheme as she was not yet 65, however, by transferring it to a personal pension she was initially able to release a lump sum of £36,000, which was enough to do everything that she wanted to do whilst leaving a further £183,000 invested in the personal pension for use later on.
*25% of the fund value is tax free; the balance would be taxed at your marginal rate depending on your circumstances and could be subject to change in the future.
**The beneficiary would be taxed at their marginal rate depending on their circumstances at the time of death.
Need advice on cashing in a defined benefit pension?
We specialise solely in defined benefit pension transfer advice.
We were established in 2007 so have many years of experience successfully helping 1000’s of individuals. Some of them we advised to transfer their pensions and some of them we advised to leave their pensions where they are and not transfer them.
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Free Pension Transfer Guide & Initial Consultation
Complete the form below to receive your Free Pension Transfer Guide.
If you would like to find out if transferring or cashing in your pension is suitable for you, we can provide a free initial consultation known as abridged advice.
Simply return the enquiry form included in the guide and post it back in the free post envelope provided.
As part of the consultation we will look at:
- What existing pension plans you have in place.
- Whether you have the right type of pension to transfer.
- What your plans are for retirement.
- How much cash you can release.
- Whether your existing pension remains the best fit for you.
- The likely cost of more in-depth advice.
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Defined Benefit Pension Transfer Warning
Transferring away from a defined benefit pension scheme means you will lose valuable guarantees.
Taking benefits early will almost certainly reduce your pension income in retirement and is only suitable for a limited number of people and circumstances. This should not be seen as an easy option for raising cash.
If you release all your money from your pension early you will not have anything left to provide you with income in retirement.
When releasing cash from your pension, usually up to 25% is tax free, the balance is taxed at your marginal rate at the time and could change in the future.
Watch the FCA video explaining the expectations of financial advisers when advising you on defined benefit pension transfers.
Grove Pension Solutions Ltd is authorised and regulated by the Financial Conduct Authority (Reference number 465051).
What our clients say
Grove Pension Solutions assisted in moving my company pension to a personal pension, which will allow me to retire 7 years earlier than planned.
Since the FCA have made this option very difficult, Grove made the process very swift and smooth, with true professionalism throughout the process. The communication was excellent at all times, and there was always someone to answer a question if it arose.
I would highly recommend Grove Pension Solutions for your personal pension requirements.
Grove managed the transfer of my pension swiftly and kept me in touch with the process at all times. On occasions when I telephoned with questions they were patient, and regardless of who I spoke to, the staff were knowledgeable, friendly and reassuring. Grove Pension Solutions went above and beyond to complete my transfer and I cannot thank them enough.
Nothing is too much trouble, everything was explained in plain English and I was asked several times if I wanted to go through with any information again or any questions , all staff were professional and completely “knew their stuff” they returned calls when promised such a pleasure to do business with a very big thank you
In the final stages of my transfer, throughout the process the service has been very professional, regular updates by phone and email, the advisors are very friendly and explain the process in an easy to understand way. Have recommended to two other people already, wouldn't have any hesitation to use Grove Pension Solutions again, 10/10 thank you.