Can I cash in my pension early in Ireland?

Taking the time to plan for retirement is a crucial step in preparing for the future, and it’s never too early or too late to begin. On this page, we’ll look at whether it’s possible to draw your pension early and look at the steps required to do so.

The information provided here is for informational and educational purposes only and does not constitute financial advice. Please consult with a licensed financial adviser or professional before making any financial decisions. Your financial situation is unique, and the information provided may not be suitable for your specific circumstances. We are not liable for any financial decisions or actions you take based on this information.

Yes, in Ireland, you can access your pension early under specific conditions. However, it’s essential to understand the rules, potential tax implications, and long-term financial consequences of doing so. 

For occupational or company pensions, you can access a pension at 50, long before the State Pension age of 66, while for a personal pension, you can access your pension pot at age 60. Part of your pension can be drawn down tax-free, while the remainder will be taxed as income. 

You can usually withdraw:

• 25% as a tax-free lump sum (up to a €200,000 lifetime limit).

• The remaining balance can be used to buy an annuity or it can be invested in an Approved Retirement Fund (ARF).

It depends. For a personal pension or PRSA (personal retirement savings account), you can access a pension early in Ireland. Both these pensions allow access once you’ve reached 60, regardless of your current employment status or whether you’ve officially taken early retirement yet.

However, if you have an occupational pension, you typically can’t draw down benefits while you're still employed in the job linked to the particular scheme. You usually need to leave that employment before accessing the pension.

Here’s a handy overview of the minimum age for accessing your pension early in Ireland.

In most cases, no, but there are some exceptions. You can sometimes withdraw your pension before 55, but only if it’s an occupational or company pension. In this case, you can cash in your pension at 50 in Ireland, but only if you’re no longer employed by the sponsoring employer.

For other types of pensions, including PRSAs and other personal pensions, you will need to wait until you’re 60 to make a withdrawal. If you find yourself unemployed in the years before retirement age (usually 65), there are special social welfare provisions for older jobseekers to help bridge the gap.

As we’ve explored above, in Ireland, you generally can’t access a pension early if you’re not at least 50. However, there are specific, limited circumstances in which early access to pensions may be permitted:

• Ill health: If you’re permanently unable to work due to serious illness or disability, you may be granted early access to your pension, regardless of your age.

• Permanent emigration: If you move abroad and meet certain conditions, early access to certain personal pensions (including PRSAs) may be allowed, but this is rare and only in specific cases.

• Extreme financial hardship: This is another rare exception; however, early access may be granted with approval from Revenue.

Whether or not you can access a pension early depends on the pension you have, so firstly, you’ll need to check this. For example, it may be a personal pension, a personal retirement savings account, an occupational pension scheme, or a buy-out bond, to name a few.

Once you’ve identified the type of pension you have, you can check whether you are eligible to access pension funds early and whether there are any other restrictions you need to be aware of. You can speak to your pension provider or a financial adviser to confirm this, but you may qualify for early access if:

• You’re no longer employed by the company tied to the pension (in the case of an occupational pension)

• You are over 50 (for occupational pensions) or over 60 (for personal pensions)

• You’re facing ill health or permanent retirement

Next, you’ll need to compile any required documents. These may include your passport or driving licence, pension scheme details (such as your policy number and statements), and, if you’re requesting access before age 50, any medical certificates, emigration documents and/or employment termination paperwork.

If you’re eligible to withdraw from your pension pot, you’ll be able to take a tax-free lump sum of up to 25% (capped at €200,000). You could then choose to invest the rest into an Approved Retirement Fund (ARF) or purchase an annuity, giving you guaranteed income for life.

Contact your pension provider to request the withdrawal forms, then complete and return all required forms with your supporting documentation.

Once approved, your lump sum will be processed and paid out. Timelines vary, but you can expect to receive the payout within two to four months.

It’s important to remember that you may owe income tax, Pay Related Social Insurance (PRSI), and/or Universal Social Charge (USC) on your drawdown, so you should take this into consideration and ensure your taxes are in order before spending your withdrawn funds.

While you’ll receive tax relief on up to 25% of your pension, you will need to pay tax on the rest.

Lump sums between €200,001 and €500,000 are taxed at 20%, while lump sums exceeding €500,000 are taxed at your marginal income tax rate plus USC.

In most cases, there are no additional costs associated with accessing your pension early, but your pension provider may impose their own fees to cash in a pension early, especially if you’re withdrawing a large portion of your fund.

If you’ve been able to draw your pension early and want to make the most of your 25% tax-free sum, there are a few options to consider.

You could use the lump sum to pay off debt or a mortgage, support your children or family, or simply spend it on something you’ll enjoy in retirement, like a holiday or home improvements.

If you don't need to use the full amount right away, putting your lump sum in a high-interest savings account or term deposit could be a safe option. Term deposits typically offer the most competitive interest rates, but you’ll need to lock your money away for a set period (usually from three months to five years), while demand deposits offer a variable rate of interest and give you flexible access to your savings if you’d prefer to be able to make withdrawals whenever you want.

The remaining 75% of your fund (after the lump sum) can be transferred into an ARF, which allows your money to stay invested. With an ARF, you can make flexible withdrawals as needed (subject to tax) and continue growing your fund through investment returns.

You could also use the 75% balance to purchase an annuity, which provides a guaranteed income for life. This option may be suited to those who prefer stability and predictability in retirement.

Now you know the answer to ‘Can I cash in my pension early in Ireland?’, and if you choose to, you have the option to put your hard-earned money into a savings account.

If you make a drawdown, the Raisin marketplace makes it easy for you to grow your lump sum savings with deposit-protected savings accounts offering competitive interest rates. Register today and start growing your wealth.