The two main rules surrounding whether or not you can use pension drawdown are having a defined contribution or money purchase pension and being aged at least 55.
You can’t access your pension before the age of 55 unless you’re very ill or are a member of a scheme that permits early retirement, although schemes that permit early retirement are few and far between.
Don’t be tempted by companies offering to ‘unlock’, ‘release’, ‘free’ or otherwise access your pension before the age of 55. Unless you’re absolutely certain you meet the criteria for ill health or early retirement it’s simply not possible. Such companies are likely a front for fraudsters trying to get their hands on your hard-earned pension savings. If you’re unsure, speak to a professional pension adviser on the Financial Conduct Authority’s register, such as Drewberry, who can offer help and advice in this area.
Senior Paraplanner at Drewberry
Those with a final salary or defined benefit pension can’t access their pension via drawdown. A defined benefit pension pays a regular income and the rules surrounding how you can take that income are very different.
If you want to use drawdown and you’re in a final salary scheme, you might want to consider a defined benefit pension transfer. However, a final salary transfer isn’t right for most people and you need to give it careful consideration, ideally by consulting an expert pension transfer adviser.
Other pensions that won’t typically allow income drawdown include:
- Section 226 retirement annuity contracts (RAC) or section 32 buy-out plans
- Defined contribution occupational schemes
- Additional voluntary contribution (AVC) and free-standing AVC plans
- Many older personal pension contracts, including stakeholder or group personal pension (GPP) arrangements.