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Can I withdraw my pension protection fund when I am 55 and do I have to put it into another pension?

29 July 2021

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Question by Alys

In a divorce settlement I have become a member of pension protection fund with £90,000 in it. I am approaching 54. Can I withdraw these funds when I am 55, and if so, do I have to put it into another pension or can I have it as cash? Thanks


Answered by James Greenly

Hello Alys, thank you for this question.

I must confess that I am not entirely sure of your question as the Pension Protection Fund (PPF) manages pension schemes from insolvent employers rather than pension fund plans with a value. In answering this question I am assuming the £90,000 you refer to is the Cash Equivalent Value attached to your share of your ex-spouses or ex-civil partners pension, as valued for divorce purposes.

I therefore think you have been granted a Compensation Sharing Order (CSO) by the courts so you have your own pension entitlement separate from your ex-spouse or ex-civil partner. You should have received a letter from the PPF confirming they have implemented the CSO and confirmed the benefits you are entitled too.

As a deferred member of the PPF you are entitled to receive payment when you reach the normal pension age of the former scheme. You can choose to retire early (from age 55) or delay beyond normal retirement age (maximum age 75).

For early retirement you have to be 55 years or older unless you have the right to take benefits sooner under what is known as the “protected pension age”.

If you are considering taking your benefits early you should approach the PPF for a retirement illustration and they will confirm your eligibility. Taking your benefits early will result in a lower pension than you would receive at normal retirement age as they are paying you your money for longer.

My current understanding is transfers-out of the PPF are not permitted so you will need to take your benefits from this scheme.

The https://www.ppf.co.uk/ has some excellent guides on their website which can assist you further and there is a dedicated members website too.

I would suggest you seek advice from a pension expert in assessing your options before making any final decisions to access your pension.

I hope this helps,

Thanks

Answered by

James Greenly

Chartered Financial Planner

I am a Chartered Financial Planner at Capital Asset Management, a boutique financial planning and wealth management firm based in the City of London.