Ask the Expert- Sam Brett

This week's Ask the Expert question- "When can I access my pension funds?"

As a general rule, you can access you pension funds from age 55. There are some exceptions to this, but they are rare. What is likely to be more of a factor is what type of pension you have, as to when you should draw. If you have funds in a personal pension, or what is known as a 'defined contribution' or 'money purchase' arrangement, you will be eligible to draw benefits from the age of 55. How you can draw funds is dependent on the arrangement you have, but typically you are entitled to 25% tax free cash with the remainder as taxable income. That being said, before you draw funds, you should investigate to see what your options are, and what method is best suited for you. Matters become slightly more complex if you are a member of a defined benefit scheme. This type of pension plan will provide you with a regular income for the rest of your life; the amount of which is linked to your time and previous earnings at the scheme's sponsoring employer. In terms of timings, these schemes have 'normal retirement dates', and usually this would be 60 or 65 - but it can vary by scheme so should be checked. If you have a defined benefit pension but need to access funds earlier than your normal retirement date, you are still entitled to from the age of 55. However, drawing early from a defined benefit scheme often comes with a hefty penalty to the income you receive, which means that the amount you get could be significantly lower than if you waited until the scheme retirement date. This could mean that you don't get what you need or want. Therefore, you need to think carefully before taking benefits early. For all pension holders, though, there is change on the horizon. In 2028, the minimum age for drawing from your UK pension is to rise to 57. So, depending on your circumstances, this needs to form part of your pension planning.

This article was originally published in the East Anglian Daily Times on 30th August 2022.