How to access your pension fund

Chris Torney / 30 March 2020

New pension rules came into effect in April, which give the over-55s the freedom to access their pension funds. Chris Torney explains which types of pension fund can be cashed in and how to do it.



Changes to the UK pension system mean that savers are finding it much easier to take cash out of their retirement funds.

The reforms, which came into effect in 2015, mean that people are no longer forced to buy an annuity with their pension pots as they were in the past.

Today’s pension options

Instead, they have the option of leaving the money invested in the stock market and other assets while taking a regular income – a process known as drawdown.

And it should now be much more straightforward to take money out of a pension to spend, invest or even give to family members.

Figures published by HM Revenue & Customs (HMRC) in January 2020 show that around 327,000 people used the new freedoms to withdraw £9.4 billion in 2019 – up by more than 20% on the previous year.

The average amount of money taken was just £3,000, however – suggesting that most people are exercising caution when it comes to accessing their funds.

Rules on taking cash

Under the new system, you can access as much or as little money in your pension as you like after you turn 55. But how simple it is to get this money depends on the kind of pension you have.

Final-salary schemes

A final-salary pension will guarantee to pay you a certain level of retirement income regardless of what happens to the stock market between now and your retirement.

However, it is possible to transfer a final-salary pension fund to a personal pension, from which you can then take cash.

Bear in mind, though, that by converting a final-salary pension in this way, you will lose the income guarantee and could end up significantly worse off. It is therefore necessary to seek professional advice if you are considering this course of action.

Company and personal pensions

If you are in a company pension which is not a final-salary scheme, you will in theory be able to access the cash once you turn 55. The same applies if you hold a personal pension.

Although some pension providers were relatively slow to update their systems to allow customer to access their cash under the new rules, you should today have no trouble exercising your freedoms regardless of who runs your pension.

Public-sector pensions

If you are in a final-salary scheme in the public sector, you may not be able to take money out of your pension or to transfer it to a personal pension in order to do so. Typically, public sector schemes that are unfunded – that is, those that are paid directly out of the public purse, such as NHS, teachers’ or police pensions – do not allow transfers.

If you are unsure what type of pension you hold or what options may be available to you, speak to your pension scheme administrator for information on your specific scheme.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.