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Phil Thomas
Senior Technical Support Consultant

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Refunds of pension contributions

Published  13 October 2025
   6 min read

Although the general rule is that once contributions are paid into a pension plan, they can’t be refunded. But there are a few circumstances when they can. Let's look at these.

Key facts

When can there be a refund of contributions?

  • When a plan is cancelled within the cooling-off period.
  • Where relevant UK earnings don't cover personal contributions in a tax year.
  • Where there has been a genuine error.
  • Defined benefit scheme where the individual leaves with less than two years' service (or less than 30 days, where a defined contribution occupational pension scheme). 

When can a contribution not be refunded?

  • When the annual allowance has been exceeded, but there are enough relevant UK earnings to cover a personal contribution.

What are pension cancellation rights?

When someone pays a pension contribution, they have a ‘cooling off’ period of 30 days during which they can cancel the contract and have the contribution returned. The contract is then treated as if it had never existed. This right exists only at the start of the contract, whether the first contribution is a single or a regular contribution - it doesn’t apply to every regular contribution paid, although some providers apply cancellation rights to every single contribution.

Refunds of excess pension contributions

Tax relief on personal contributions is limited to the higher of £3,600 each tax year or 100% of relevant UK earnings.

Of course, some individuals, particularly the self-employed, find it difficult to predict what their earnings are going to be in a tax year and so may end up paying more than their earnings.

When someone pays contributions greater than their relevant UK earnings (or £3,600, if greater) in a tax year, they can request a refund of the excess amount over their earnings (or £3,600, if greater). Known as a refund of excess contributions lump sum, this refund may be essential when an individual has gone over their tax relief limit, and the scheme only accept contributions that attract tax relief.

An individual can only receive a refund after the start of the next tax year, once all evidence of their earnings for the previous year has been provided. 

Where the relief at source method has been used for receiving tax relief, the basic rate tax relief on the excess contributions that’s been received from HMRC must be returned to HMRC.  

HMRC Pensions Tax Manual - PTM045000 - Contributions: refunds of contributions

Refunds after exceeding the annual allowance

You’d think that if HMRC allows refunds of contributions greater than earnings that they’d allow contributions to be returned if the annual allowance is exceeded. But you’d be wrong.

Any contributions over the available annual allowance must remain in the plan and an annual allowance charge paid. This is a particularly common situation where the individual has a lower annual allowance because the money purchase annual allowance has been triggered or their annual allowance has been reduced because of high taxable income and they didn’t appreciate the consequences.

Refunds due to genuine errors

If there’s a genuine error involved in the payment of contributions, the contributions can be returned. At first sight, this looks like a bit of a get out of jail free card.

Unfortunately, the definition of genuine error is quite narrowly defined and boils down to errors made by third parties rather than the individual and/or their adviser.

Examples given by HMRC are:

  • where a bank doesn’t act on an instruction to cancel a direct debit or standing order
  • where an employer deducts a larger employee contribution from an employee’s salary than they should
  • where an employer inadvertently pays some contributions after the employee leaves service

HMRC Pensions Tax Manual - PTM146600 - Other authorised payments: genuine errors: “contributions” to a pension scheme that are not contributions 

Short service refunds in occupational pension schemes

If a member of an occupational defined benefit scheme leaves within 2 years of joining, they can receive a refund of their individual contributions. Occupational defined contribution schemes can also make short service refund lump sums as they’re known but only if service is less than 30 days.

Refunds when opting out of auto-enrolment

After being enrolled in a scheme, an individual has up to a calendar month where they can ask to leave the scheme (opt out) and get a refund of any contributions they have paid. If the individual chooses to leave after the one-month window, a refund of contributions won’t be allowed unless the individual meets the conditions for a refund for some other reason (as detailed in this article) and it is allowed under the scheme rules.  

 

Frequently Asked Questions (FAQs)

Yes, if they cancel their pension within the ‘cooling off’ period (usually 30 days from the start of the contract), they are entitled to have their contribution returned. The contract will be treated as if it never existed. This right applies only at the start of the contract, not to every regular contribution, although some providers may offer cancellation rights for each single contribution.

If they leave an occupational defined benefit pension scheme with less than 2 years of pensionable service, they may be eligible for a refund of their personal contributions. For defined contribution occupational schemes, a refund is possible only if they leave after no more than 30 days. After these periods, contributions usually remain in the scheme.  

Yes, if their personal contributions in a tax year exceed their relevant UK earnings (or £3,600, if greater), they can request a refund of the excess amount. This is known as a refund of excess contributions lump sum. Any basic rate tax relief received on the excess must be returned to HMRC.  

If an individual pays contributions over their available annual allowance, those contributions must remain in the pension plan. They will need to pay an annual allowance charge. They cannot get a refund of the contributions over the annual allowance.  

Refunds are allowed if there’s a genuine error, such as a bank failing to cancel a direct debit, an employer deducting too much from their salary, or contributions paid after they leave employment. However, HMRC defines ‘genuine error’ narrowly, typically involving third-party mistakes rather than errors by the individual or their adviser.  

If an individual opts out within one calendar month of being enrolled, they can get a refund of their contributions. After this period, refunds are only possible if they meet other specific conditions and the scheme rules allow it.  

Disclaimer

The information provided is based on our current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice. Also it may not reflect the options available under a specific product which may not be as wide as legislations and regulations allow.

All references to taxation are based on our understanding of current taxation law and practice and may be affected by future changes in legislation and the individual circumstances of the investor.