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Can I sell my pension?

Yes you can. Since 2015, most people have been able to withdraw their whole pension in cash as soon as they reach the age of 55.

If you’re over the age of 55 and choose to withdraw your pension, the first 25% is usually tax-free and the rest of your pension may be taxed at the normal rate.

If you’re under the age of 55 and sell your pension early, you’ll be subjected to very high tax bills up to 55%, which means releasing or selling your pension early could end up costing you more money with no benefits, only losses.

Please note: We at Get Claims Advice can’t give clients financial advice and always recommend using a regulated independent financial adviser for such advice. However, we are mis-sold pension specialists who can help clients with making a claim. Contact us today for more information.

What is pension selling?

Pension selling, more formally known as pension releasing or pension unlocking, is where you withdraw a lump sum of cash from your pension pot before you actually retire. In some cases, people will close their pension pot entirely and withdraw their full pension savings.

This is not always advisable and anyone looking to release their pension early should do so with caution. Find out more below to see if you should sell your pension early.


Should I sell my pension?

If you’re under the age of 55, selling or withdrawing your pension in most circumstances is highly inadvisable. This is because you’ll be hit with a huge 55% tax bill on the amount of cash you withdraw.

Even if you’re over the age of 55 and not retired, you may be taxed for anything you withdraw over 25%, so if you’re planning to sell your pension, it’s best to do so with caution.

It’s always worth remembering that pensions exist to make sure people have a comfortable and secure income even after you’ve retired, so releasing a pension early means you’ll have less when you’ve retired.

People are also sometimes encouraged to release, or sell, their pension early on a promise by financial advisers that the money from that pension will be reinvested into a scheme and a profit will be returned. In many cases, this is unfounded and people find their pensions have been mis-sold.

Financial advisers who recommend people sell their pension before the age of 55 are also often unregulated by the Financial Conduct Authority (FCA), which means those who withdraw and invest their pension can be left without any protection if things go wrong.

As well as huge tax bills, selling your pension early can also mean you incur fees from third-parties who act on your behalf to withdraw and, potentially, invest your pension pot.

However, there are certain circumstances where selling your pension is OK.

If you have a serious illness and are considering retirement, it makes more sense to sell your pension early. You may not be taxed at a 55% rate and the pension release may be arranged directly with the pension provider depending on their scheme rules.

Also, if you have a protected retirement date, which means you have an earlier retirement date than the state pension age, you will be able to sell your pension before you turn 55 without the heavy taxation involved – this will be specified in your pension plan.


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Pension selling warning signs

You may find that you’re exposed to marketing material, or called by financial advisers, encouraging you to access your pension before the age of 55.

It’s very important to treat these companies and their advice with extreme caution. They are almost always unregulated by the FCA (Financial Conduct Authority), which means if you lose money as a result of withdrawing, and subsequently investing, your pension, you will have less ground to complain or claim compensation.

Here are some of the things to be aware of:

  • The company offers to sell your pension as an investment for which you can expect a return
  • The financial advisers you speak to are pushy
  • Companies offering you loopholes, cashbacks or advances
  • Cold calls, emails or marketing material
  • The company identifies loopholes to get you more money

The above is considered to be pension mis-selling and can cost people hundreds of thousands of pounds. In some cases, people can lose their entire pension pot.

We’re experts at handling mis-sold pension claims and have a deep understanding of the potential pitfalls to avoid. Find out more about mis-sold pensions here.


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Pension selling frequently asked questions

Can I sell my pension for a lump sum?

If you’re considering selling your pension you can do so for a lump saw or withdraw your entire pension pot. If you’re over 55 and want to do this before you retire, anything over 25% of your pension pot may be taxed at a normal rate.

If you’re under 55, you will be subject to far larger taxation – up to 55% of the amount you withdraw. In almost all circumstances, selling your pension before you turn 55 is highly inadvisable and poses a threat to your savings.

Can I sell my defined benefit pension?

You can, but in most cases you’ll be worse off. Transferring from a defined salary pension involves giving up the benefits that come from a final salary pension for a lump sum of cash. This can come with a number of risks. Find out more about final salary pension transfers here.

Can I sell my pension under 55?

You can, but in most circumstances, it’s unadvisable because you’ll be heavily taxed (55% on the amount you withdraw). Companies that arrange early pension releases are also unregulated by the FCA (Financial Conduct Authority), which means if anything goes wrong, you’ll find it difficult to make a claim or find support.

What is pension mis-selling?

Pension mis-selling can occur when a financial adviser approaches you and advises you to invest, sell or transfer your pension into a scheme while promising a guaranteed return or while giving misleading advice.

You can find out more about mis-sold pensions here.

Can I sell my private pension?

You can sell your private pension, but you’ll be heavily taxed (55% on the amount you withdraw) if you sell your pension under the age of 55.

Companies that arrange early pension releases are also unregulated by the FCA (Financial Conduct Authority), which means if anything goes wrong, you’ll find it difficult to make a claim or find support.

Can I sell my military pension?

Prior to April 2015, you were able to transfer your military pension. However, since April 2015, you haven’t been able to transfer/sell your military pension into a Personal Pension.