Can you take final salary pension at 55

The crucial factor here is the age at which all private pensions can be accessed in the UK and this is set by pensions regulation. The current age is 55 but this is rising to 57 in 2028. There are exceptions to this rule notably, ill-health and a shortened life expectancy.

Under normal circumstances, Final Salary Pensions start to pay out when the member reaches the Normal Retirement Age (NRA) of the defined benefit scheme they belong to. This is often between the age of 60 and 65 but it can be younger or older depending on the scheme rules.

It is usually possible to take a Final Salary Pension from age 55 by requesting an Early Retirement Quote (ERQ) from the defined benefit scheme administrator. They will calculate the reduced annual pension income amount and reduced tax-free lump sum compared to taking the pension at the scheme’s NRA. The ERQ is a quote and does not have to be accepted.

Another way to answer the question: Can you take a Final Salary Pension at 55 is to consider transferring to a personal pension pot and taking it as flexible pension income from there if that is more beneficial overall.

Selecting the option to transfer a Cash Equivalent Transfer Value (CETV) to a defined contribution pension scheme such as a personal pension pot may be suitable but the reasons for doing this must be well thought out and be suitable given current personal financial circumstances and the likely pattern of expenditure in retirement.

Final Salary Schemes must not give advice about whether transferring out is in the best interests of the member which is why they require members to take independent advice from a suitably qualified financial adviser. The advice must be independent of the scheme rather than referring to the status of the financial adviser who is often restricted to a provider’s own offering.

The Financial Conduct Authority (FCA) say that a transfer from a defined benefit scheme is unlikely to be in the best interests of most people because they believe most people would be better off with a guaranteed income for life. Whilst this may be true it is important to recognise that people’s circumstances vary considerably in terms of health, wealth, and attitude.

A fixed income for life will not be suitable for everyone and for single people in poor health, they will not be able to pass on any Final Salary Pension benefits to their loved ones.

The purpose of taking financial advice when considering a transfer is to do a deep analysis of the suitability of taking this option. If the advice comes out in favour of a transfer, then this advice is insured against the possibility that it may be found to be unsuitable advice at some point in the future. This is one reason why the professional indemnity insurance premiums are so high for this type of advice.

If the advice is not to transfer, then the member will be able to refer to the suitability report as to why the financial adviser has concluded it is not in their best interests to transfer. The FCA has recently changed how this advice is charged for by banning contingent advice (October 2020) which means the advice must be paid for regardless of the outcome of the advice. To make matters worse, the fees are chargeable to VAT if there is no transfer!

Taking your pension at 55 is currently possible for anybody wanting to do this. The type of pension is not relevant as they are all subject to UK pension regulations. All Scheme trustees have discretion over whether to allow taking benefits younger than this due to ill-health and terminal illness.

Opting to take a Final Salary Pension early means becoming a pensioner of the scheme which means the income is guaranteed for life and is fully covered by the Pension Protect Fund should the pension scheme get into difficulties.

This articled looked at an introduction to can you take a Final Salary Pensions at 55 but there is a great deal more to consider than is covered here. Advice can only be given to an individual after a thorough assessment of all personal (and their partner’s) financial circumstances.

Would you like to get some professional advice to gain increased financial peace of mind and family security? If the answer is yes, the next step is to have an informal exploratory chat with a qualified adviser to see if it is worthwhile proceeding to the formal process known as regulated financial advice.

To help you make the right decision for your final salary pension, we will take you through a clear, simple, transparent, and regulated four step process. 
If you would like to explore and discuss the options for your final salary pension transfer, - helping you make the right decision on your pension 
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