Can I cash in a Defined
Benefit Pension?

Case Study: Cashing in a National Grid Defined Benefit Pension

Can I cash in a defined benefit pension?

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: Can I cash in a Defined Benefit Pension?

As part of our Defined benefit pension transfer advice this case study takes a look at cashing in a National Grid Defined Benefit Pension Scheme. The National Grid Pension Scheme have been providing generous transfer values.

If you have been offered a enhanced transfer values and incentives to transfer out of your old employers defined benefit pension scheme, the following information will be of interest to you.


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.

MrS 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 including 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.

By leaving the rest invested she felt safe in the knowledge her money could pass on to both her partner and even her daughter if anything was to happen to her AND because of the generous transfer value offered by the scheme, even with a ‘cautious’ type of investment the eventual retirement benefits will probably not suffer as a result of moving her pension and releasing part of her lump sum early.

*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.


This service only applies to pensions in the UK.

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.

Transfer a defined benefit pension scheme to a Personal Pension SIPPs

You are entitled to transfer your pension defined benefit scheme away from National Grid to a Personal Pension and currently they are providing very generous transfer values. This means that when they calculate how much your National Grid pension is worth, the equivalent value they are prepared to give you is high; in other words good value for you.

  • Once the money is in your own Personal Pension, you will be allowed to benefit from the new pension freedom rules introduced from April 2015. This means once you reach age 55 you could release the entire pot as a cash payment (subject to tax* and leaving you with no future pension income) or, simply take out what money you need, when you need it. 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 die at any time the entire fund remaining would pass on to anyone you want, not just a financial dependent so it could go to your grown up children, and it would be tax free if you die under the age of 75; any money left after age 75 would be taxed**.

See the National Grid Pension website for further information about transferring your pension out. 



Get started today and receive expert advice from Grove Pension Solutions

Initial consultation free

Need advice on cashing in a defined benefit pension?

It’s free to find out your options 

Grove Pension Solutions Ltd is regulated by the Financial Conduct Authority.

We are financial advisers specialising in helping people transferring defined benefit pensions early and have been doing this for many years now, long before the Pension Freedom changes came into effect.

We have provided professional advice to thousands of people over the years.

Our service allows you to evaluate your Pension Freedom options without paying a penny. It’s only if you decide to go ahead with releasing all or part of your defined benefit pension fund that you pay a fee. You are under no obligation to go ahead if you don’t want to.

Get Started Today and receive our free Information Pack.


From the moment I went on to the website with Grove, right to the end of my pension dealings. They’ve acted in a very professional way with myself, I would recommend them to any person who – like me – needs much needed help on pension release. Well done to everyone at Grove, you deserve a pat on the back, thank you.

Mr KW, West Bromwich

Thoroughly recommended, nothing to much trouble, always there to give advice, always dealt with the same person at all times. Very glad that I used this company.

Mrs JA, Queenborough

At all stages I was completely satisfied with the help I got. At every stage I was made aware of any pro’s and con’s of pension release.

Mr JE, Maidstone

Your staff gave me so much relief and I would like it known that your staff are helpful, understanding, and make the whole process easier than I thought it would be. I am so so happy to have put this in your company’s hands.

Mrs ED, Manor House

I was in a situation and found that Grove Pension Release came to my rescue and appreciate everything they did for me.

Mr GGB, Chicester

I had no pre-knowledge of what would be involved in pension release so I was pleased by the professionalism and friendly service offered by your organisation, things were explained in a clear and concise way so I would have no hesitation in recommending your services to other people.

Mr KH, Sunderland

This was the best decision I have made. I cannot express how helpful Grove Pension Solutions were. … Their staff are very knowledgeable, professional and friendly, not something other companies offer these days.

Mrs JM, Glasgow

Your staff were very helpful from the start and very professional in their approach to what is a complex field. I would recommend your services to anybody.

Mr AS, Oxford

I have already recommended your services to some of my colleagues. I was highly delighted with all aspects of the services I received. Thank you for a painless, understandable transaction.

Mr GWB, Driffield


Grove actively support the following charities and institutions

Bromley Mencap