Deciding when to access your pension is an important step in planning for later life. It’s a decision that can affect your income, your lifestyle, and the long-term security of yourself and your family. Understanding how pension access works, and the factors involved, could help you decide when - and how - to take pension benefits.
In this guide, we’ll explain the minimum age you can usually access your pension, how early access works, and the key rules to be aware of. We’ll also cover what could happen if you take money sooner than planned, and the main things to consider when thinking about how pension access aligns with your future plans.
This information is for general guidance only and does not constitute personal financial advice. Current legislation and your personal circumstances may change.
Different types of pension
There are several types of pensions available in the UK, and the way you access yours will depend on which type you have. The main categories are defined contribution pensions, defined benefit pensions, and the State Pension, each of which has different rules and features.
Defined contribution pensions
Defined contribution pensions, sometimes called money purchase pensions, are pension schemes that allow yourself and your employer to gradually contribute to a shared pension pot, which is typically invested.
The value of your pension pot is based on how much has been paid in and how the investments have performed over time. There’s a cap on how much you could contribute tax-free to your pension each year, currently set at £60,000 in the UK for most people. This cap is known as the annual allowance.
In addition to the annual allowance, for defined contribution pensions, a lower limit of £10,000 may apply if you've already started taking flexible taxable income from your pension. This is called the Money Purchase Annual Allowance (MPAA). Once triggered, the MPAA replaces the annual allowance for defined contribution pension contributions, meaning contributions above £10,000 may be subject to a tax charge.
As the value of this type of pension isn’t fixed, the amount of money that will be available to you at retirement can go up or down with the performance of underlying investments so you could get back less than you’ve paid in. While the specific rules on how you access this type of pension are dependent on your provider, there are usually multiple ways to take the money when it’s time.
Defined benefit pensions
A defined benefit pension, which is sometimes referred to as a final salary scheme, provides a set level of income in retirement based on your salary at the time you retire and how long you worked for your employer.
Final salary schemes calculate your retirement income based on a portion of your salary at the end of your employment. This portion is known as the accrual rate, and it is multiplied by the total number of years you were a member of the scheme.
Unlike defined contribution pensions, final salary pensions provide a retirement income that's usually calculated using your salary, length of service, and the rules of the pension scheme. Because the final salary scheme isn't directly linked to the performance of underlying investments, the level of income upon retirement is generally more predictable.
The annual allowance also applies to defined benefit pensions, although the allowance is measured by the increase in the value of your benefits over the tax year, rather than by the level of contributions paid in.
State pension
The State Pension is a regular income provided by the UK government to people of retirement age, as long as they have at least 10 years of National Insurance contributions on record.
It is separate from private and workplace pensions and can only be claimed once you reach State Pension age, currently 66 for both men and women but currently planned to rise to 67 by April 2028. State pension age is not a fixed number and may change over time.
The State Pension is designed to provide people with a basic level of income in retirement, rather than replace their full earnings. As a result, many people also rely on private or workplace pensions to supplement their income in later life.
What is a private pension?
A private pension is a type of pension you arrange independently, where you make regular payments into a pension pot to support your income later in life.
Contributions to a private pension are typically invested, which means the value of the pension can grow over time, although it can also go down as well as up depending on the performance of the underlying investments meaning you could get back less than you’ve paid in.
A private pension is not to be confused with a workplace pension provided by an employer. While both aim to help you build retirement income, a private pension is usually set up by you as an individual, rather than opting in or being auto-enrolled as part of an organisation.
Rules around contributions, tax relief, and access will depend on the type of pension you have, as well as your individual circumstances.
Understanding Normal Minimum Pension Age (NMPA)
The earliest you can usually access your private or workplace pension is a number known as the Normal Minimum Pension Age (NMPA). Under current rules, this is set at 55 in the UK. However, the NMPA will increase to 57 on 6 April 2028, potentially impacting those born after 5 April 1973.
The exact age at which you can access your pension may depend on your date of birth and the rules of your pension scheme. In some cases, earlier access to your pension might be possible, for example where a protected pension age applies or in situations involving ill health.
Defined contribution (DC) pensions allow for flexible withdrawals once the NMPA is reached, whereas defined benefit (DB) pensions have a set Normal Pension Age defined by the scheme. Members of a DB scheme could potentially retire early but there may be financial implications for doing so.
When you begin taking money from your pension, you may be able to take part of it as a lump sum, with the remainder accessed in different ways depending on your scheme and how you choose to take your pension benefits.
When is my pension supposed to pay out?
Pensions are usually designed to provide income later in life, but the choice of when to access it depends on your pension scheme and individual situation. Most pensions have a default age when they are expected to begin paying benefits, although this can sometimes be changed.
Normal Pension Age (NPA)
The Normal Pension Age (NPA) is the age at which your pension scheme expects you to start taking your benefits in full, without any reductions. This number is a default set by the scheme and may be linked to a specific age, like 60 or 65, or to your State Pension age.
Your pension provider’s projections for retirement income will be based on you accessing your pension at this point unless you choose to do otherwise, though taking benefits earlier or later will have an impact on the amount you receive.
Selected Retirement Date (SRD)
If you decide the Normal Pension Age isn’t right for you, it’s possible to choose another, more suitable date, known as a Selected Retirement Date (SRD).
The Selected Retirement Date is a date you choose with your pension provider as the point you plan to retire and start taking benefits. This gives you the flexibility to align your pension with your personal plans.
Once you set a Selected Retirement Date with your provider, changing your SRD or accessing your pension earlier than planned can impact how long your pension lasts and the level of income you may receive.
Is it possible to take your pension early?
There are some circumstances in which it’s possible to take your pension before the usual minimum age, although strict rules apply. Below are two scenarios where you might be able to do so.
You need to retire early due to ill health
You may be able to access your pension earlier than usual if you need to retire due to health issues. This typically applies where you are permanently unable to continue working because of a medical condition.
The exact rules will depend on your pension provider and the terms of your scheme. In some cases, additional medical evidence may be required before early access is granted.
Your pension provider offers a Protected Pension Age
Some pension schemes include a Protected Pension Age, which allows you to take pension benefits earlier than the Normal Minimum Pension Age (NMPA).
This usually applies to specific professions or older pension arrangements where early retirement was built into the scheme rules, or for certain public sector roles like the Police or Fire Service.
Eligibility depends on the individual scheme, so it’s important to check with your pension provider to understand what applies.
Will my pension pot be worth less if I take it early?
While there may be circumstances in which it’s necessary, taking your pension early can reduce the overall value of your pension pot over time, and have other financial impacts.
Withdrawing money from your pension can trigger the Money Purchase Annual Allowance (MPAA), reducing the amount you can contribute to pensions in the future.
If you access your pension sooner, it also has less time to grow, particularly if part of your savings remains invested. Any money you do take early will reduce the overall amount left in your pension pot, which means it needs to last longer throughout retirement.
If your pension includes any investments, their value can change over time, so withdrawing funds earlier may also limit the potential for future growth and potentially lead you to lose out over the long-term.
How can I take money from my pension savings?
There are several ways to take money from your pension savings once you reach retirement age. The approach you choose can depend on your circumstances, how you want to receive income, and how long your pension needs to last.
Take a tax-free lump sum
You may be able to take part of your pension as a tax-free cash lump sum up to a set Lump Sum Allowance (LSA).
Under current rules you can typically take up to 25% of your pension pot tax-free up to a maximum amount of £268,275. You will then pay income tax on any additional withdrawals beyond this amount.
Any taxable money you take from your pension will be added to your other income for that year (i.e. your salary) and taxed at the appropriate level. If you take a large withdrawal from your pension, it could push you into a higher income tax bracket, meaning you pay more tax overall.
When you begin taking money from your pension, you could also trigger the Money Purchase Annual Allowance (MPAA), meaning your tax-free limit for contributions to your pension will drop to £10,000 per year.
Set up an income drawdown (Flexi-access drawdown)
Taking a lump sum allows you to access a portion of your pension upfront, but you may want to keep the rest invested to take advantage of any potential future growth. That’s where income drawdown can help.
Income drawdown, also known as flexi-access drawdown, allows you to move some or all of your pension into a separate drawdown pot, sometimes called a crystallised fund. From this, you can usually take an initial tax-free amount, while the rest can be withdrawn over time.
Drawdown can be a flexible way to manage how and when you access your pension. You can choose to take a regular income, like monthly payments, or withdraw lump sums when needed. The remaining money stays invested, which means its value can rise or fall depending on market performance.
Buy an annuity
Buying an annuity means using some or all of your pension fund to secure a guaranteed income, usually paid for the rest of your life.
You can buy and set up annuities through an insurance company or other financial services provider, who will then pay the income to you over a set term. The amount you receive depends on various factors, for example your age, health level, and the total size of your pension.
Once the annuity is set up, the terms are usually fixed. This means the value of payments is agreed at the start and won’t typically change, although certain annuities offer increases over time.
You may need to pay tax on the income you receive because income from annuities is treated in the same way as wages or salaries.
Choosing an annuity might mean sacrificing a degree of flexibility, as it can’t typically be changed once in place, but a guaranteed income can offer more certainty when planning your retirement.
Can I take some of my pension and keep working?
Yes, it’s possible to take money from your pension and continue working. You don’t usually have to take your whole pension pot at once and may choose to withdraw money gradually instead. This can provide flexibility if you want to balance work and retirement income.
Deciding when and how much to take will depend on your spending needs and how much income you need alongside your earnings. Some people choose to combine pension withdrawals with other income streams, like their salary or savings, to support their lifestyle.
Accessing your pension early may affect how long your savings last, as it gives your pension pot less time to grow and could reduce the value of any investments, so it’s important to understand how this fits into your wider financial plans.
When can I claim my state pension?
You can normally claim your State Pension when you reach State Pension age, which is set by the UK government and depends on your date of birth. As of 2026, this is generally age 66 for both men and women, but there are plans in place for it to rise.
The State Pension age is gradually increasing to 67 for those born between 6 April 1960 and 5 March 1961, with plans to increase it to age 68 scheduled for some time between 2044 and 2046 for people born on or after 6 April 1977.
The pension age is regularly reviewed by the government and subject to change, so it’s important to check the exact age at which you become eligible, and to keep on top of any changes.
To receive your State Pension, you usually need at least 10 years of National Insurance contributions on your record. You also need to actively claim your pension, as it is not paid automatically. In some cases, notional income rules may apply when assessing overall retirement income.
Where can I get advice on my pension options?
If you’re thinking about your pension options and wondering which is the best route for you, it might be a good idea to consider seeking guidance or expert advice. Pension Wise is a free, government backed service that offers impartial guidance to help you understand your choices when accessing your pension.
It’s important to be aware that Scottish Friendly doesn’t offer financial advice, so any decisions about your pension will need to be made independently. If you need personalised recommendations based on your circumstances, you may want to speak to an independent financial adviser.
An adviser can explain your options in more detail and help you understand how they might apply to your situation.
Key takeaways
You can usually access private and workplace pensions from age 55 (rising to 57 from April 2028), depending on your scheme rules.
Your State Pension is separate and can typically be claimed from age 66 for men and women, though that's planned to rise to 67 by April 2028.
Taking your pension earlier can reduce the amount available later, as your savings have less time to grow.
There are different ways to take your pension (lump sum, drawdown, or annuity), each with different tax and income implications.
In limited cases, you may be able to access your pension earlier (e.g. due to ill health or protected pension ages).
Important information
Scottish Friendly does not provide financial advice.
This information is for general guidance only and does not constitute financial advice.
If you’re unsure how your individual circumstances might impact your pension, you may want to seek advice from an independent financial adviser.
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