Can I cash in my pension?

You can but why would you buy an annuity at current depressed annuity levels which will be even worse for someone of a relatively young age? Annuities start to beat investments from income at some point after age 75.

You can instead take a cash lump sum of 25% and leave the rest of the money invested to produce an income. You can manage the investments just as you do now or can adjust them to increase the income level if that won't leave you short of money when you finally do retire.

The lump sum can be gradually invested within a S&S ISA to get it out of tax long term and eventually generate tax free income in retirement.

The pension income could be reinvested into another pension to get a second lot of tax relief and tax free lump sum. Particularly beneficial if it's going to be coming from money taxed at higher rate.

Whether this makes sense depends on what you'd do with the money. One quite common bad idea is paying off a mortgage.

I'm a pension fund trustee. I don't spend time on this board because there are a lot of advisors on here who know a heck of a lot more than me. However the Pensions Regulator has recently circulated advice to pension fund trustees who are registered with them, warning against early release pension offers. It's dated 25th Feb 2012, but they've only sent me an e-mail today. Here's a link:

http://www.thepensionsregulator.gov.uk/press/pn12-05.aspx

Consumers have been warned to steer clear of pension offers that claim to be able to provide loans or release tax-free cash from people’s pension pots before they reach age 55.
The Pensions Regulator, Financial Services Authority (FSA) and HM Revenue and Customs (HMRC) have recently detected an increase in these schemes, with known transferred funds amounting to nearly £200m by the end of 2011. The organisations are urging individuals not to be taken in by website promotions, cold-calls or adverts encouraging them to transfer their existing occupational or private pension to a new arrangement in order to access a cash payment or loan.
These schemes usually work by transferring some of the member’s pension fund into highly risky or opaque investment structures, frequently based overseas - with no guarantee that members will get their money back if something goes wrong.
By accessing pension savings earlier than the law permits, individuals are likely to be poorer in retirement – and can face substantial tax charges.

The press release continues:

Victoria Holmes, case team leader at The Pensions Regulator said:
“These offers are typically advertised on websites or small adverts in newspapers. If the offer sounds too good to be true, it probably is. It may simply be a scam designed to get hold of your money. Transferring your pension to one of these questionable investment models could result in you losing your entire pension.

“Immediate financial gain may sound tempting, particularly in the current economic climate. But don’t be taken in – you are likely to face substantial tax charges and will be poorer in retirement.”

Jonathan Phelan, head of the FSA's unauthorised business department, said:

“Like The Pensions Regulator and HM Revenue and Customs, the FSA has seen an increase in firms offering "early pension release schemes" often referring to them as unlocking, liberating or releasing funds tax free. There is a high chance that these are scams run by illegitimate firms trying to con individuals out of their pension money.

"All firms that sell personal pension plans, advise on them and arrange for the transfer of pension plans should be authorised by the FSA. You should check whether the firm that’s giving you advice or is selling or transferring a pension plan is authorised before engaging with them. If you deal with unauthorised firms you are not covered by the Financial Services Compensation Scheme or the Financial Ombudsman scheme and you could face tax charges and lose your pension pot if things go wrong."

Graeme Hood, head of HMRC’s pension schemes office, said:
“Tax relief given on pension saving is intended to encourage individuals to save for the long-term to provide them with an income in retirement. That is why UK tax rules set a minimum age from which benefits from pension savings can normally be accessed.
“HMRC is committed to ensuring that the rules around the age from which benefits can be taken from pension funds are protected and that savings built up with the benefit of generous tax reliefs are not misused. We will take firm action to detect and pursue those who deliberately break the rules by offering schemes to access pension savings other than as intended by Parliament.”

it turns out a company called phoneix had taken over the pension in 2003 and aviva were now in charge of it.

Aviva and Phoenix are two different companies with no links. It would be one or the other. Not both.

recived the retirment pack and it showed the pension value at 10,300 pounds.i requested a triviality payment and they said i had to be 60 to claim triviality,which i feel cannot be right.

it is right. You have to be aged over 60 and ALL your pensions have a value (or equivalent value) of £18,000 or under. The scheme retirement age has nothing to do with it.

.i would really appreciate some advice as i am at a loss what to do next.the pension will pay me 60 pounds per month which would not even cover a sky subscription.i am out of work at the moment so 10,000 pound would help greatly

If you are out of work and could do with the money then you should think about cancelling that sky subscription. The pension is only low value because you paid very little into it and are attempting to take it very early. £10k in a pension at 35 is low but its better than nothing come your real retirement period when it will do you far more good.

I'm afraid the team at Aviva were absolutely correct. Early retirement is permissible for certain careers, but not early triviality pensions.