Can I get my pension contributions back? That’s a common question that pension contributors have in their minds when they leave the pension scheme. They often worry about losing their pension contributions.
The good news is that “Yes, you can claim back your pension contributions.” You will not lose your money, irrespective of when and why you decide to leave the scheme. However, whether you can get a refund on claiming will depend on particular circumstances.
It is essential to speak to your pension scheme provider before you decide to leave the scheme and request your money back. In this guide, we’ll discuss the ins and outs of UK pension refunds; read till the end so you don’t miss out on any critical information.
What Is A Pension Refund?
When pension contributions to a specific pension scheme or fund are repaid or returned, it is known as a pension refund. People often wonder, ‘Can I get my pension contributions back?’ because it is not always possible to get the money back. Pension refunds are possible only under certain circumstances.
However, the money is not lost, so don’t be disheartened. The money will stay in the fund account, which you can access at a certain age. At present, the age for accessing pension funds is 55 years. However, the pension age is proposed to increase in the future.
Types of Pension & the Length of Time You can Request for a Refund
- Defined contribution pension: In this case, you can request a pension claim back if you leave the scheme within 30 days of joining.
- Final salary pension or defined benefit: If you leave the pension scheme within two years of joining, you are eligible for a refund and, therefore, request the same.
- SIPP (Self-Invested Personal Pension) or Stakeholder Pension: In this case, you can ask for a refund within 30 days of joining the scheme. Sometimes, it can be longer – hence, you must check with your pension provider.
Note: Your employer can re-enroll you in a pension scheme every three years based on your eligibility. If you are not interested in continuing, you must remove your name within 30 days.
If your contribution exceeds 100% of your income, you can request a lump sum refund for the excess contribution.
You can request a refund if you are eligible and have a public pension for 5 years. However, you need to talk to the provider for more details. Remember, pension refunds can impact your retirement benefits; hence, you must consult a professional financial advisor like TaxCan and Cangaf Ltd. before deciding.
NHS Pension Refund
You can request a refund if you have not reached the state pension age and leave within 2 years of joining the NHS scheme. Regarding teacher pension refunds, a refund is possible if you have 2 years of qualifying service.
Can I Get My Pension Contributions Back After The End Of The Period?
It is impossible to get a refund after the end of the above period. You can either keep the funds in the account where they are or transfer them to another provider. You can decide to rejoin a pension fund in the future, or if you are eligible for re-enrollment, you may automatically become a part of the scheme again.
What Are Important Things To Consider When Requesting A Pension Refund?
Interesting Video
When you decide to claim back your pension, you must note that you won’t get anything after retirement. Building a significant pension takes a lifetime of service, and reclaiming it can impact your personal finances after retirement. Therefore, if you are not sure about reclaiming your pension contributions, it’s advisable to seek assistance from professional finance advisors or accountants.
Remember, the pension amount may be small when you start your career; it will surely multiply to get bigger with compound interest, tax relief, and employer contributions.
Compound interest is the interest earned on interest. In the long run, the interest can build up considerably.
At times, the employer contributions can be increased if you contribute more. This helps grow your funds even more. If your pension scheme is not performing as expected, you are always free to transfer to another service provider that offers better interests.
However, remember never to take a pension fund’s past performance as an indicator of its
future performance. Interest rates can vary—they can fall or rise with time.
Similarly, if you find tracking multiple pensions challenging, you can consolidate them all into one. When you transfer the funds, the employer contributions and the pension’s growth are yours. Speak to professional advisors like TaxCan and Cangaf Ltd. to better understand ways to boost pensions.
What Is The Time Taken For A Pension Refund?
A refund usually takes 3 to 10 days, but it can be longer based on circumstances. The payment is transferred electronically.
What Amount Can I Expect To Receive In My Pension Refund?
You need to understand the tax implications of pension refunds in the UK.
The refund is subject to tax. The amount that you will receive in your pension refund is your contribution minus tax, as per the table below –
| Amount (£) | Tax Percent |
| First 20,000 | 20% |
| Above 20,000 | 50% |
You cannot claim back pension tax; it’s non-recoverable. Additionally, your employer contribution and salary sacrifice will not be refunded.
In case the pension is contracted out, National Insurance deductions will apply.
When the State Second Pension is reinstated, CEP needs to be paid to HMRC’s National Insurance Contributions Office.
Is It Possible To Rejoin The Pension Scheme?
Yes, you can, especially the workplace pension scheme. You need to write to your employer.
You can re-enroll in a scheme once a year. You could also be included in the different pension schemes where your employer doesn’t have to contribute necessarily.
What Is The Procedure For Requesting A Pension Refund?
You can request a refund from the pension scheme provider. They will guide you through the process.
Refund Process & Timeline
- Start by filling in the application form for a claim back in the UK.
- You should check for eligibility to request a refund.
- Then, contact your pension provider/ employer.
- Finish the application paperwork, like the RF12 form for NHS pension refund.
- Submit the form to the authorities.
- The employer can also fill out the application.
The amount is transferred to your bank account or through electronic or payment order. The UK pension refund is dependent on the pension scheme and the responsiveness of the employer or the pension provider.
You need to speak with your pension scheme provider about eligibility conditions and the process of claiming back a pension. Each scheme differs, and your provider will provide specific information about the refund. Also, speak with a financial adviser about the procedure, timelines, investment opportunities, and pension options.
Back-Dated Pension Contributions
In the case of back-dated pension contributions, you can pay extra contributions to your pension account, more than the annual allowance, and still receive tax relief. For example, in the tax year 2021-2022, contributions up to £40,000 can be made to your pension, and the unused benefits can be carried over from the past three years.
Suppose the annual allowance in one year is surpassed, but you did not consume the entire allowance in the past. In that case, you are allowed to contribute to your pension additionally against the residual allowance left in your previous years, up to three prior years. You can still receive tax relief while making additional contributions.
Conclusion:
Reclaiming your UK pension contributions offers flexibility but requires careful consideration due to tax implications and long-term retirement impacts. For expert guidance tailored to your financial goals, consult professionals like TaxCan and Cangaf Ltd. Their expertise can help you understand pension refunds and optimize your retirement strategy effectively.
