Can I Cancel My Pension and Get the Money? Understanding Refund Options

Leaving a pension scheme can raise an important question: can I cancel my pension and get my contributions back?

In the UK, pension refunds are possible in limited circumstances, but the rules are strict and vary depending on the type of pension and the scheme’s own regulations.

In this guide, we explain how pension refunds work, who may be eligible, how they are taxed, and when alternative options such as pension transfers may be more suitable.

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 your pension to a new provider. 

Pension types and refund eligibility

Example: Sarah, 29, leaves a job after four months. She paid £1,200 into a workplace pension. Her scheme rules allow a short service refund, but only her own contributions are returned, and tax is deducted. Alternatively, she could transfer the full pot to a new pension and keep employer contributions.

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

The NHS Pension Scheme is divided into three sections: the 1995, 2008 and 2015 schemes. The 1995 and 2008 sections are final salary schemes, while the 2015 scheme is a career average arrangement, where benefits are based on average earnings over time.

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

The process of requesting a pension refund in the UK begins by confirming whether you are eligible, which typically depends on factors such as how long you were a member of the scheme and the specific rules of that pension.

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. 

It is important to note that contributions made through salary sacrifice arrangements cannot usually be refunded, as these are treated as employer contributions rather than personal payments.

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

Short service refunds from occupational pension schemes are subject to a special tax charge deducted at source by the pension provider.

In general:

• the first £20,000 of a refund is taxed at 20%
• any amount above £20,000 is taxed at 50%

These tax rules apply specifically to short service refund lump sums and do not necessarily apply to all pension-related payments. Tax treatment can vary depending on the type of scheme and the nature of the payment.

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 2025/2026 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 did not use your full annual allowance in previous years, you may be able to make use of the carry forward rules. These allow you to:

• use unused annual allowance from the previous three tax years
• make higher pension contributions in the current tax year while still benefiting from tax relief, provided you have sufficient relevant earnings

Carry forward does not remove the annual allowance altogether. Instead, it increases your effective contribution limit by adding together the current year’s allowance and any unused allowances from the past three years.

The difference between a pension refund and a pension withdrawal

A pension refund and a pension withdrawal may both result in money being paid out, but they apply in very different situations and have different long-term implications.

A pension refund usually applies when you leave a pension scheme shortly after joining. It typically returns only the contributions you personally paid in and is subject to specific eligibility rules and tax charges. Employer contributions and investment growth are normally excluded. The same applies if the pension you are having refunded is a salary sacrifice scheme.

A pension withdrawal, on the other hand, involves accessing your pension savings once you are allowed to do so under pension access rules. This means drawing money from the full pension pot, which includes your contributions, employer contributions and any investment growth, and is taxed according to standard pension withdrawal rules.

Key Points to Remember

• Pension refunds are possible only in limited circumstances
• There is no automatic right to a refund based on service length alone
• Refunds usually exclude employer contributions
• Short service refunds are subject to special tax charges
• Pension transfers often preserve more value
• Professional advice can help you choose the most suitable option

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