Can I get my company pension early or take it as a lump sum?

12 November 2013


My wife wants to know whether her company pension could be paid early. We have also been told that a very low pension could be taken as a complete lump sum as the administration cost of managing the pension would not be cost effective. Is this the case?


If you are a member of an occupational pension, then the scheme will normally state when benefits can be taken. This, for most schemes, coincides with the state retirement age. It is common for a scheme to provide the option of a pension for earlier retirement from age 55. In doing so, the benefits are normally reduced to reflect the longer period of time you are likely to draw the pension.

If only very modest benefits have been accumulated, it is possible to receive the total pension as a lump sum payment. The first 25% of this sum will be tax-free, with the balance normally taxed at the basic rate. Consider this option if your short-term need for capital are greater than the long-term benefit of receiving a very low monthly pension.

It would therefore make sense to contact the scheme administrator and ask it to provide some figures for you both to consider.

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