Can I cash in my final salary pension?

I’ve been saving into a final salary pension for all of my working life. My neighbour is about my age, but he’s been saving into a defined contribution pension instead. He’s recently reached 55 and cashed in some of his pension tax-free to make home improvements and go on a cruise. Can I cash in my defined benefit pension for a similar lump sum?

Question asked by Mr A Hart
Are You Pension Happy?
Call us on 02084327334
I know how much my pension is worth
I know how much my pension costs
I have clear financial goals for my retirement

Answered by Michael Englefield


Can I cash out of my final salary pension?

The short answer is that it’s usually very difficult to cash in your final salary pension in the same way your neighbour has cashed in his defined contribution pension.

Cashing in your final salary pension

That’s because your neighbour’s pension has a defined pot of cash belonging to him that he’s been saving into his whole life. That’s not the case with a final salary pension.

If you’re 55, the legislation does technically allow you to access your pension arrangements, but most final salary pension schemes do not usually permit this before the fund’s set retirement age. Moreover, the scheme could impose stiff penalties for doing so and it could have a significant impact on your final annual pension entitlement.

However, there is another option if you’re looking to access your final salary pension early, before your pension scheme allows.


Final salary pension transfers

You could request a cash equivalent transfer value (CETV) from your final salary pension provider. This is the cash lump sum your pension provider is willing to offer you in exchange for you transferring out of your final salary pension scheme.

Final salary pension transfer values have soared recently as employers look to reduce pension liabilities by cutting the number of people eligible for generous, lifelong final salary pension payments.

Access your defined benefit pension with a final salary pension transfer

In terms of bang for your buck, there’s rarely been a better time to consider a pension transfer.

If you’re interested in working out the cash equivalent transfer value for your defined benefit pension, consider using a tool such as The Drewberry Final Salary Pension CalculatorThis will give you an idea of how much your DB pension is worth if you transfer out.

As with most areas of life, pension transfers aren’t entirely risk-free. Don’t forget that a final salary pension is a promise to pay you an income for life, probably index-linked to keep up with inflation. You’re giving that up by transferring out.

However, there are also a number of benefits, including more flexibility with how you take your retirement income. That means it could be easier to take a 25% lump sum from your pot, just as your neighbour did. Transferring out of your final salary pension scheme also makes it easier for loved ones to inherit your pension after you pass on.

Ultimately, whether or not a pension transfer is right for you depends on your circumstances. Before considering a final salary pension transfer, you should get pensions advice to make sure it’s suited for you. If your pension pot is worth more than £30,000, it’s an FCA requirement.

Get expert pension transfer advice today

Need final salary pension transfer advice?

If you are looking for expert advice on transferring your defined benefit pension, pop us a call on 02084327333.

Our expert advisers are on hand to advise on all aspects of final salary pension transfers, as well as to help you turn the cash lump sum into a retirement income.

Final salary pension
Money purchase pension
Defined contribution pension
Defined benefit pension
Final salary pension transfer
Pension transfer
Cash equivalent transfer value (CETV)
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Start your journey today...
  Find out how a Drewberry financial adviser can help you reach your destination by making the most of your finances.
Call us on 

Frequently Asked Pensions Advice Questions

I’m self-employed and don’t currently have a pension. What’s the best way of starting...
I am getting myself up to speed with all the changes in the pension legislation in the 2015 Budget and...
Could you help explain the difference between pension fund values and pension transfer values...
I’m self-employed and don’t currently have a personal pension. What’s the best way...
Need Help? Live chat now and get an instant answer from our Experts...


Our Latest Reviews
Kevin Ballinger

Excellent service. Well documented and prompt meetings arranged, with polite reminders. Good, clear advice and excellent product choice for me. Very pleased and highly recommended.

Kylee Kelly

Jake and Jack and Drewberry were excellent and I would definitely use their services again. We purchased life insurance from them and we are now getting them to look into income protection cover for us. They are very knowledgeable and the set up was a breeze.

Priyadharshini Westphal

Really personalised service. Would definitely recommend. Very helpful and not pushy. Oliver was through and lovely to speak to.

We are rated 4.9/5 based on 1742 independent client reviews.
To read more of our independent client reviews click here →
4.92 / 5 Average
1918 Reviews
D Coyle
Overall Rating
Fantastic service from Egle, knowledgeable and patient about a variety of policies. Egle helped me get the best deal available and I am very satisfied with the professional service that I received from her and Jack.
S Redmond
Overall Rating
Sarah was totally professional, not at all pushy which I liked, but went over every detail to make sure I knew about the policy and to make sure it was the right policy for me. Would totally recommend Sarah. Regards Siobhan
A Allen
Overall Rating
Sarah Melvin at Drewberry helped me get a good deal on my income protection. She was very patient, helpful and professional. I feel if I had any problems I could contact her. Thank you and I would definitely recommend Drewberry.
B o'connor
Overall Rating
Very helpfully and found me the right cover that suited me and my cost of what I wanted to pay. Diffenatly use him again
G O'Grady
Overall Rating
Emma Wilson @ Drewberry was fantastic providing a simple and seemless service from quote through to contracts. Would recommend without hesitation.