Should I cash in my pension?

Anne | South Yorkshire| 19/06/2019 | 0

  • Pension

Anne's question in full

I have a small pension which I have not drawn on yet, and which I stopped contributing towards when I was 60, two years ago. I am seriously thinking about cashing it in, as I’m worried Brexit will mean substantial losses. But I keep changing my mind. Not very helpful, I know. Would I be better off just leaving it where it is? I have no need of it at present.

Helena Wardle's Response

Hi Anne,

It is quite normal to be nervous about the current uncertainty, and Brexit is causing investors worry.

It’s difficult to comment on the investment specifically held within your pension without knowing more about you and the funds, but I would be happy to give you some guidance to consider.

The Brexit Effect

Different things may impact on investment markets over time, and it is hard for anyone to accurately to predict what the outcome or impact of Brexit may be.

In general, investors are typically better off taking a longer term view by leaving money invested to ride out the ups and downs of markets, instead of trying to pre-empt markets.

The fact that you don’t need the money now puts you in a better position, as you could leave the money invested to recover losses if the investment lost money in the short term. I do understand that this is not comfortable, but historic markets have shown us that investors are usually better off by leaving the money invested and letting the funds recover.

Switching up your risk

You may also be able to switch your current investment to a less risky investment within your existing pension contract, if you don’t feel comfortable with the ris. You can contact your pension provider to find out if this is possible. This not necessarily my advice, but it is an option that may be available to you.

Think about the impact a loss may have on your personal circumstances, and if you can afford to take investment risks with this money? Try and quantify it, and think about when you will need this money.

If you don’t have any definitive plans for this pension then you may be more able to afford to take investment risks. 

Investing is emotional

Also factor in how you will react, if the investment statement comes through the door and the value is less. Will this cause you to consider withdrawing it more seriously?

My advice to clients is normally to sit on your hands and not to react, but I feel it helps to consider the emotive reactions that you may have before it happens. If it’s not Brexit, it will be something else in the future, as it’s the nature of investments. Although I do understand that potential losses can make investors nervous.

Cashing in your pension

If you cashed your pension in, you may have to pay tax on some of it, depending on how much income you earn elsewhere. This will reduce the value of the money you get out of the pension, if you took it out as a lump sum. Whereas you may be able to control the tax liability by drawing it out over time.

Something else to factor in, is where will you invest it if you take it out?

Moving to Cash

If the plan is not to use the money, then you need to think about the impact of inflation if you just leave it in a cash savings account.

Most cash savings accounts are paying low interest which means that you are likely to earn less than inflation.

While this is not a capital loss, it does reduce your future spending power, which is a loss that people sometimes struggle to take into account.

I hope this helps you, but if you feel you need a more personal assessment it may be worth seeing a financial adviser for a more detailed discussion personal to you.

Hope this helps,




Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Our Expert


Helena Wardle

Helena is based at Smith and Wardle Financial Planning in Hitchin, Hertfordshire. She began her career in financial services in 2006 at the Nationwide Building Society and started advising clients in 2008. She's a Chartered Financial Planner with experience providing regulated financial advice on everything from mortgages to estate planning. She’s also a qualified pension transfer specialist and all-round good sort.

Related Questions

Got a Question?

Got a question? Ask our experts

Ask Our Experts

Sign up for Holly's blog

Stay up to date

Our free weekly blog with Holly's
no-nonsense opinions, tips & food for thought.
If you change your mind, you can unsubscribe at any time. We'll never share your details and you can unsubscribe any time.