Can I take my final salary pension at age 55?

I’m almost 55 and have a final salary pension. I’ve read the articles about the new pension freedoms, but as I’m part of a defined benefit scheme I don’t know if they apply to me. Will I be able to draw on my final salary pension from the age of 55?

Question asked by Mr P Hill
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Answered by Michael Englefield

 

When can I start taking my final salary pension?

The short answer is that it depends on your pension scheme’s rules. If you contact your pension provider, they’ll be able to tell you when you can start taking your defined benefit pension.

However, most final salary schemes have a ‘normal retirement age’ – i.e. the age at which you’re entitled to start drawing your pension – of later than 55, probably 60 or even 65. You might have a bit of a wait yet.

Can I take my final salary pension early?

However, while your DB pension scheme might not let you take your pension at 55, if you’re keen to do so one of the options you might consider is transferring out of your final salary pension scheme.

Access your final salary pension scheme early with a pension transfer

This involves your employer giving you a cash lump sum in exchange for you waiving your right to a pension income for life.

It might not sound like a good deal, but pension transfer values are currently at record highs. That means you might be surprised at how much your employer is willing to offer you in the form of a cash equivalent transfer value to leave your pension scheme.

Offers of upwards of 30 times your annual pension entitlement from final salary schemes are not uncommon, so there has rarely been a better time to think about transferring your DB pension.

If you’re interested in learning more about final salary pension transfers and getting a projection of your CETV, why not visit the Final Salary Transfer Calculator by Drewberry? That can give you an idea of the sum you might receive on leaving your DB pension.

If you do decide to move from a final salary pension to a money purchase pension, you can then usually take advantage of the new pension freedoms to provide you with a retirement income.

These pension freedoms include the right to take 25% of the pot as a tax free lump sum, as well as more flexibility when it comes to loved ones inheriting your pension when you die.

Before considering a final salary pension transfer, you should get pensions advice to make sure it’s suited for you. If your scheme is worth more than £30,000, it’s a mandatory requirement.

 

Need final salary pension transfer advice?

If you want to discuss transferring your defined benefit pension, why not pop us a call on 02084327333 and speak to one of our expert pension advisers?

We’re able to advise on all final salary pension transfers, and can also help you plan for retirement with your new pot of cash.

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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.
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