What happens to your pension when you retire will depend on what type of pension you have.

Usually, nothing happens immediately and you have the choice as to when you take your pension and how you use it.

In this article, ‘retirement’ assumes you are above minimum pension age which is currently 55 and moving to 57.

State Pension


The age at which you retire has no real impact on when you can take your State Pension.

The State Pension will only be paid once you reach State Pension age. You can find out your State Pension age by using the State Pension forecast service.

You can’t start receiving the State Pension until State Pension age but you can defer receiving it until after.

If you do defer receiving your State Pension then the payments will increase by around 1% for every 9 weeks you defer.

If you don’t claim your State Pension it will defer automatically.

Defined benefit pension

When you retire with a defined benefit pension (also known as a final salary pension) then you have slightly more choice.

The defined benefit pension will have its own ‘normal retirement age’ which will be set in the scheme rules. This is usually either 60 or 65. Most newer public sector schemes have now aligned their normal retirement age with the State Pension age.

If you retire before the pension scheme’s normal retirement age then you will usually have the option to take the pension early but you will probably find a penalty has been applied.

Alternatively, you could delay taking the pension past the normal retirement age and you will likely benefit from an increase in future payments.

If the defined benefit pension is a private sector pension then you will usually have the option to request a cash equivalent transfer value. Depending on your circumstances you might want to transfer the value into a defined contribution pension.

Defined contribution pension

A defined contribution pension (also known as a personal or private pension) will give you the most options at retirement.

At retirement you can:

Do nothing. Leave the pension invested for as long as you like and don’t touch it.
Convert the pension to a secure lifetime income (annuity).
Convert the pension to some form of drawdown allowing you to take a regular income, lump sum or ad hoc withdrawals.
A combination of secure income and drawdown income.

Even if you start withdrawing from your pension you may find you can still pay back into a pension if your circumstances change. You just might be limited in what you can pay in due to annual allowance and tax free cash recycling rules.

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