Cashing in or Unlocking an Occupational Money Purchase Pension


Cashing in an occupational money purchase scheme can have a number of complications. There should not be any issues about when you take the benefits as most schemes allow benefits to be taken from age 55 currently. 

How it works

An occupational money purchase scheme is basically a pot of cash. The value of these benefits depends on the value of the fund. If you're taking it early, then it will have less time to grow, and so obviously is more likely to provide lower benefits. Also, If you're taking an income, the income will also be lower because you're younger. There are three other key points you need to be aware of before you cash in such a pension:

Tax-Free Cash - the amount of tax-free cash available from such a scheme depends on your length of service, your earnings and when you joined the scheme. This could mean that the entire value of the fund could be available as a tax-free lump sum and usually, no less than 25%. It is generally always best to ask the company or provider to calculate the maximum tax-free cash.

Guaranteed Annuity Rates - some older contracts have some guaranteed benefits. This could mean a guaranteed level of income at a particular age. By taking the benefits early, it is possible that these could be lost.

Penalties - some companies apply a penalty for taking the benefits before your normal retirement age. These can be nominal to relatively large penalties

Please visit the section on the risks of pension unlocking

Options for Unlocking an Occupational Money Purchase Pension

The two basic options are:-

1. Tax-free cash and Annuity purchase - this allows you to take the lump sum and buy an annuity, which is an income for life. See annuities for more details.


2. Tax-free cash and Income drawdown - this again allows you to take the lump sum, but rather than converting the remaining money to a fixed income, it can then be invested. It is possible to either take an income from the remaining funds, or leave it invested without taking an income. If you do not take an income, then the fund could grow to provide you with better benefits at a later date. See income drawdown for more details.


Contact us online, or call 0800 011 2713 , without obligation to find out more about "cashing in" your pension and the risks for you.

Find out more about the risks of pension unlocking

Warning: Taking any of your pension benefits early is likely to reduce your income at retirement. Therefore, pension release is only suitable for a very limited number of people and circumstances and should not be seen as an easy option for raising cash. This is because a pension is designed to provide you with benefits when you retire. Always seek independent financial advice, which we offer



Contact us now

If you can't find the information you're looking for on the website, or you want to know more or have a question, or just want to chat through some details about your pension then please feel free to contact us, without obligation. Either contact us online or call 0800 011 2713.


Got a question? Want to speak to a pension specialist?

Contact us now online or call 0800 011 2713, without obligation.