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When can I retire?

Find out what age you can retire, and the impact of early retirement on your pension.

In this article
Can I retire early? Do I have to retire? When can I claim the state pension?
Can I get my pension at age 55? What effect will early retirement have on my pension? Can I access my final salary pension early?

Can I retire early?

There is no longer a fixed age at which you have to retire - it's up to you.

However, you’ll need to be in a secure financial position to fund your retirement years before you give up work. 

To help you prepare, take a look at our guide on how much will you need to retire?

Here we look at when and how you can access your retirement funds.

 

Do I have to retire?

The answer is ‘no’, as long as your employer is happy for you to work on. 

Thanks to the removal of the default retirement age in 2011, the decision to stop working is in your hands – in most cases you can no longer be made to retire when you reach 65.

It is still possible for certain employers to impose a compulsory retirement age, provided that they can objectively justify it (eg air traffic controllers and police officers).

However, workers can no longer be forced to retire on the grounds of age alone.

When can I claim the state pension?

Since December 2018, men and women have qualified for the state pension at the same age - currently 66. This will increase to 67 between 2026 and 2028.

In July 2017, the government announced its intention to increase the state pension age from 67 to 68 between 2037 and 2039, which is seven years earlier than previously planned.

This means that people born between April 1970 and April 1978 can expect their state pension age to be 68 and not 67, though this is yet to be confirmed.

The state pension can cover a significant part of your retirement expenditure. The new state pension (for those who reached state pension age after April 2016) is worth £185.15 a week at its full level, or £9,627.80 a year in 2022-23. 

Check your state pension age using Which?'s calculator. 

Can I get my pension at age 55?

If you have a defined contribution pension, you can generally access your money at 55. At this point, you’ll also be able to withdraw up to 25% of your pension tax-free.

However, some schemes will have have a 'normal' or 'selected'  retirement age and if you access your pension plan before this date, you may incur an early exit penalty.

The one exception is if you’re seriously ill and need to access your money early. This should be arranged with your pension provider who will be able to tell you how this works and whether you are eligible. 

The government intends to increase the minimum age at which you can access personal pensions to 57 in 2028, so that it will remain 10 years before you are eligible for the state pension.

What effect will early retirement have on my pension?

State pension

If you stop working early, your state pension could be lower. This is because the amount you get is based on your history of National Insurance contributions

You need 10 years' worth of National Insurance contributions to get any state pension at all, and 35 years' to get the full state pension (£185.15 a week in 2022-23). 

You can find out how many years you currently have by checking your state pension forecast.

Private or workplace pension

The immediate risk of cashing in a private pension early is that you run out of money in retirement. 

But you could also severely limit how much you can contribute to a pension in the future by accessing your savings early. 

If you withdraw cash beyond your 25% tax-free lump sum, you could trigger something called the 'money purchase annual allowance'. This will reduce the amount you can pay into a pension each year while still getting tax relief from £40,000 to just £4,000.

This could be a serious issue if you want to get money out of, say, an older, smaller pension but carry on working and saving for the future. 

Find out more in our guide to how the pensions annual allowance works.

Can I access my final salary pension early?

It’s a little more complicated if you have a final salary pension, also known as a ‘defined benefit’ scheme.

In this case, you’ll receive a portion of your salary based on the number of years you paid into the scheme. When you can access your money is different for final salary pensions and will depend on the individual scheme rules, so you should check with your provider.

Final salary schemes will usually have a ‘normal retirement age’ (the age at which you can start taking your pension), which is often 60 or 65.

The normal retirement age for public sector pensions will vary depending on the scheme you’re enrolled in, and when you joined it. 

As an example, the NHS pension scheme is divided into different groups, with most members falling under the ‘2015 section’. 

For these members, the normal retirement age will be the same as their state pension age. Other members remain under the older 1995 or 2008 sections; their normal retirement ages will be 60 and 65, respectively. 

Under the Teachers’ Pension Scheme, members in the final salary scheme will generally be able to access their benefits at 60 if they joined before 1 January 2007, or 65 if they joined after.

Transferring out of a final salary pension scheme

If you’d like to access your final salary pension earlier, you may be tempted to transfer to a ‘defined contribution’ pension

A transfer will involve your employer giving you a cash lump sum in exchange for you waiving your right to a pension income for life.

This is likely to give you more flexibility, but there are risks involved, and you should think very carefully about the benefits you’re likely to lose.

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