I want to access my pension

There are a number of ways to access money from your pension and each has its own benefits. This page explains the main options available.

Choosing what to do with your pension

  • You can choose to take your full tax-free lump sum, usually up to 25%, and the rest when you need it.

  • You can take the remaining 75% whenever you like. You can take it all at once or take little bits when you need it. It's important to note though that it is taxable.

  • Any money you haven't taken will remain invested, which means it has the chance to grow. But, as with all investments, it could go down in value too and you could get back less than you put in.

  • If there's any money left in your pension when you die then this can be left to your loved ones.

Learn more about taking tax-free money

Cash in your whole pension all at once

  • You can take your full pension pot in one go. The first 25% is usually tax-free, however the rest is taxable. It will be added to any other taxable income you have and is subject to income tax. This means that taking it all at once could push you into a higher tax bracket.

Take your cash in stages

  • You can take money out your pension in stages, whenever you need to until it's all gone.

  • Every time you take money out, the first 25% is  usually tax-free and the rest is subject to income tax. For example, if you took out £1,000, up to £250 would be tax-free and you may have to pay tax on the other £750.

  • If there's any money left in your pension when you die then this can be left to your loved ones.

Learn more about taking tax-free and taxable income

  • You can usually choose to take up to 25% of your pension pot tax-free. 

  • The remainder is used to give you a guaranteed income for the rest of your life. This income will be subject to tax.

  • Choosing this options means you can't normally leave a lump sum to your loved ones when you die. However, when you first take a guaranteed income for life, you can choose to leave an income for a loved one.

Learn more about a guaranteed income

Important considerations

It's important to make sure your pension lasts as long as you need it to and you have enough to support you and your loved ones throughout your retirement. You should also consider the impact of inflation on your income in the future.

How and when you take your money can have a significant impact on the amount of tax you pay. You may also have to pay Emergency Tax which you would then have to claim back.

The importance of leaving money to your loved ones will have an impact on which option you choose for taking your money.  Also you may want to adjust your income or lump sums depending on how much you want to leave.

If you're not ready to start taking your money yet or you choose an option where some of your money remains invested, then it's important to make sure you're invested in the right funds for you. Over time things can change and what used to be the right fund for you may no longer be. It's important to regularly review your fund choice.

When choosing a guaranteed income for life you could get a higher income if you or your partner's health and/or lifestyle conditions are taken into account. This is known as an enhanced annuity. It's important to shop around as some companies may not offer this option and you could get a higher income elsewhere.

Over 55 and looking to take your pension?

Whether you're thinking about taking money from your pension now or are a number of years away, talking to a financial adviser could help.

An adviser can explain the different ways to take your money, and recommend the best approach and timings for you including how to take your money in a way that saves most tax.

If you don't already have an adviser, we can help. You can book a no-obligation financial review with one of our advisers in your area. We offer a restricted advice service.

Find an adviser

Protecting yourself from pension scams

There are a number of different pension scams out there and we don't want you to be the victim of one. So if you’re thinking of reinvesting the money from your plan, take a minute to find out how you can protect yourself and stay ahead of the scammers. There is also some very useful information available from The Pensions Regulator.

Calculators and tools to help you plan

We have a number of useful calculators and tools to help you understand how the different options could impact your retirement income, how long your money could last and how tax might affect your income.

Need more help?

We know there’s a lot to consider when planning for retirement, and it can be tricky to know where to start. To help you understand all your retirement options, we recommend speaking to your adviser or getting guidance.

Find a financial adviser

Find an independent financial adviser in your area to help you in your future pension planning.

Visit
www.unbiased.co.uk
and enter your postcode.

Pension Wise

Pension Wise is a free and impartial guidance service offered by the Government. They can’t make recommendations or tell you how to invest your money, but will provide information on a range of available pension options.

Visit
moneyhelper.org.uk/pensionwise or call 0800 280 8880 to book a phone or face-to-face appointment.

HMRC

Visit
hmrc.gov.uk to find out more information on tax rules and legislation which may affect you and your pension plans.