Lump Sum from Workplace Pension But Remain Employed

Published / Last Updated on 29/04/2021

What happens when an employee reaches age 55 or older and wants to take part or all of their workplace pension tax free lump sum and/or the taxable pension element as flexible drawdown or an annuity?

The employee is technically retiring from the scheme i.e. crystallising their workplace pension i.e. they are retiring and leaving their pension scheme (a type of ‘opting out’).

Employer obligations after an employee has taken some or all of their pension fund but they still wish to work on:

  • Employer must invite the employee to rejoin the scheme at least once a year.
  • Employer must automatically enrol the employee back in to the pension scheme at least every 3 years even though the employee has technically ‘opted out’ provided the employee is still eligible for automatic enrolment


Employees at this age are likely to be eligible unless working low, part time hours in which case employee may have to formally ask to join the scheme and employers cannot refuse.  That said, employers do not have to make payments into schemes if you earn these amounts or less:

  • £120 per week
  • £480 over 4 weeks
  • £520 per month

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