Taking a refund
If you leave your pension scheme within two years of joining you may be able to take a refund of your contributions depending on the type of scheme. You should bear in mind that if you take a refund you will not have any pension savings for this period.
If you leave your pension scheme, you do not lose the benefits you have built up. They continue to belong to you and you have several options for what to do with them. Your scheme administrator or pension provider should tell you which options apply to you
If you leave your defined benefit pension scheme with less than two years’ membership, you may be able to take a refund of the contributions that you’ve paid if the scheme’s rules permit this.
Members of occupational defined contribution or money purchase pension schemes with less than 30 days service are able to request a short service refund of just their contributions. Since 1 October 2015 those who leave employment (or opt out) with more than 30 days service will be unable to request a short service refund and will instead be entitled to a short service/pension benefit.
If you have made any contributions using a salary sacrifice arrangement, these cannot be refunded as they are classed as employer contributions and must remain in your pension pot.
If you have been a member of a personal pension or stakeholder pension scheme, you only have the option of taking a refund if you’ve been a member for less than thirty days and you haven’t made any contributions using a salary sacrifice arrangement.
In each case, the amount that you receive will be subject to tax to take account of any tax relief you received when you paid contributions.
Contributions refunded from a defined benefit or money purchase pension scheme are taxed at 20% on the first £20,000 and at 50% on the remainder. and, where applicable, will include any investment gain or loss. The amount you receive back from a personal pension or stakeholder pension scheme is the contributions that you paid, with any investment gain or loss, net of basic rate income tax relief.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.