Can I get my pension contributions back? Find the answer not only to the question of whether it is possible to claim a pension refund but whether or not you’re eligible, how pensions work, and much more with Moneyfarm.
Are you having second thoughts about the pension scheme you chose and are afraid that if you leave it now, you’ll lose the contributions that you’ve made so far? Fear not. If you decide to leave your pension scheme as opposed to doing a pension transfer, you won’t lose what you’ve built up. After all, it’s your money!
Depending on your specific circumstances, you may be able to get a refund of your pension contributions. To find out what options are open to you, contact your pension scheme provider.
| What is a pension refund? | A pension refund is a repayment of the pension contributions you’ve made to a given pension fund. |
| If I leave a company, can I get my pension contributions back? | Those who have chosen to leave their workplace pension scheme within 2 years of joining are entitled to a refund of the pension contributions paid over that time period. |
| How can I request a pension refund? | If you meet the criteria above and are eligible for a refund, you can request it from your pension scheme provider. The provider will tell you what you need to do to get it. |
What is a pension refund?
Usually, your pension contributions will remain in the pot until you’re eligible to access them, often around the pension age. However, in some cases, you may be able to request a refund of the contributions you’ve paid. In certain circumstances, your refund will be a return of the contributions that you’ve made to the pension scheme up to the date of your request.
The eligibility criteria for a pension refunds
Your eligibility for obtaining a refund depends on the type of pension in question.
- Defined contribution workplace pensions: Should you decide to leave a DC workplace pension scheme within 30 days of joining, you are able to request a refund. In some cases, you can have up to 2 years to claim a refund, although it is quite rare. Check with your pension provider. It’s also possible to get some money back if you’ve contributed more than you earned.
- Defined benefits workplace pensions: Whereas the usual time to claim refunds of DC pensions is 30 days, the norm with DB pensions is up to 2 years.
- Private, stakeholder or self-invested personal pensions (SIPPs): You normally have up to a 30-day “cooling down” period during which you can request a refund after starting a private pension. Sometimes, it might be longer. Check with your pension provider for confirmation.
With workplace pensions (and private pensions), if you are outside the eligibility criteria mentioned above, your pension pot will likely have to stay where it is, or you could have the option to transfer it to a new pension provider.
How to apply for a pension refund after automatic enrolment
If your employer automatically enrols you in a workplace pension scheme, or you’ve changed your mind about your stakeholder, personal or self-employed pension, you can request a refund of pension contributions under the circumstances outlined above. To make a claim, contact your pension provider, check your eligibility, ask them how the process works, and request the form they need you to complete.
The usual cut-off point for DB pension refunds is 2 years, but it’s worth checking as certain DB occupational pensions have specific rules.
Refunds from the NHS pension
When it comes to the NHS Pension Scheme – there are three different sections – 1995, 2008, and 2015. The first two are final salary pensions. The third (2015) provides you with an income based on your average earnings. It’s less generous than the final salary scheme. Refunds from the 1995 and 2008 schemes cannot be applied for if you’ve been a member of the scheme for 2 years or longer. Neither will be able to apply for a refund if you reached Normal Pension Age during the period of membership for which you are requesting your refund. For more information, refer to the “NHS Pensions – Refund of pension contributions” document.
Refunds from the Teachers’ Pension
Teacher pension refunds can only be made if you’re either a deferred member or you’ve opted out of the Teachers’ Pension. You can request a repayment if you have less than two years of qualifying service. The earliest you can opt-out is after 3 months. For more information, refer to the payments refunds page on the Teachers’ Pension website.
Refund of pension contributions within 5 years
You may be entitled to request a refund of pension contributions within the last 5 years instead of 2 years with certain public pension schemes. Speak with your pension scheme provider to check your eligibility.
Pension refund process and timeline
How to get pension money back starts with applying for a pension refund in the UK, and factors such as having fewer than two years of participation in a qualified pension scheme determine eligibility. After establishing eligibility, the person must contact their pension provider or employer, complete the necessary application paperwork (such as the RF12 form for NHS workers), and submit them to the proper authorities. The employer may also fill out the application. If further information is needed, electronic payments take 3 to 10 business days or longer. Note, however, that you can’t get a refund of any contributions that you made to your pension through salary sacrifice schemes.
After processing, the pension refund is sent to the individual’s bank account or payment order, perhaps with National Insurance and income tax deductions. The timing of a UK pension refund depends on the pension scheme and the employer or pension provider’s responsiveness. Refunds may affect future retirement benefits; therefore, individuals should also consider transferring pension rights or connecting membership before seeking a refund.
Ask your pension scheme provider for information on your pension refund eligibility and how to claim back pension contributions. They will be able to provide you with specific information on how to request your refund. Before you go to claim your refund, consider speaking with a financial adviser about the pension refund procedure, timetable, how to invest money for retirement and what other pension options you have.
Tax Implications of Pension Refunds
When pension funds are returned, HMRC will deduct tax based on the total value of the refund. The first £20,000 of your refund will be taxed at 20%. Anything above £20k will be taxed at 50%.
How to claim a tax refund on pension small lump withdrawals
Putting pension refunds aside for a moment, if you take small lump sum pension withdrawals (in exceptional conditions even before 55) from your scheme (after having withdrawn your 25% tax-free entitlement) there is a chance you were overtaxed. It happens when HMRC doesn’t give your pension provider a tax code indicating how much tax to deduct. In this instance, they use an emergency tax code. It has been reported that HMRC has repaid over £1 billion in tax refunds to date.
If you believe you are due a pension tax refund relating to a small lump sum payment, go to the gov.uk website and download pension refund form P53. If you are claiming a pension tax refund after having flexibly accessed and emptied your pension pot, download form P53Z. For more information, check out the “Claim a tax refund when you’ve taken a small pension lump sum (P53)” page on the gov.uk site.
Back dated pension contributions
Backdating pension contributions allows you to pay additional contributions to your pension beyond the annual allowance while still receiving tax relief. In the 2024/2025 tax year, you can contribute up to £60,000 to your pension and carry over any unused benefits from the previous three years.
If you’ve surpassed your annual allowance in one year but did not use the full allowance in previous years, you can make additional contributions to your pension using the previous years’ residual allowance and still receive tax relief, as long as you use the residual allowances from up to 3 years prior to the current tax year.
The important difference between pension refunds and withdrawals
When you withdraw money from a workplace pension, you are taking money from a pot, which includes the accumulated contributions deducted from your salary, plus the contributions made by your employer and the accrued interest. But when you get a pension refund, you only get back your personal contributions. You do not get the contribution made by your employer. The same applies if the pension you are having refunded is a salary sacrifice scheme.
Before April 2020, employers had to pay CEP (Contributions Equivalent Premiums). This scheme, originally set up by the UK government, was to buy the pension holder back into the secondary State Pension. Subsequently, it has been replaced by the New State Pension.
If you are getting a refund from a SIPP you set up yourself, your pension provider might retain some of the funds to cover their own expenses in managing your scheme.
Unless you are desperate for cash, rather than asking for a pension scheme refund, you might be better off having your pension transferred. That way, you get the benefit of the full pot, including your and your employer’s contributions.
FAQ
How long does it take to receive a pension contribution refund?
The time it takes to receive a refund of pension contributions can vary depending on the pension provider and administrative processes involved.
What are backdated contributions?
In the case where you did not make full use of your annual personal allowance in previous years, backdated pension contributions allow you to pay tax-efficient contributions even if you have reached the current year’s limit.
Are pension refunds taxed?
Refunds of pension contributions are taxed at 20% for the first £20,000 of contribution received.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
