Tax-free money first and taxable money when you need it (also known as "drawdown")

Drawdown allows you to take some or all of your 25% tax-free cash (assuming you have sufficient lifetime allowance remaining) first and the rest as an income or lump sums when you need them - although it will be taxable.

You can choose how much and when to take your taxable money. This gives you a little bit of control over how much tax you pay. For example, if you're a basic rate tax payer you could withdraw amounts that keep you within the basic rate threshold.

Any money that hasn't been withdrawn remains invested, meaning it can grow. Although please remember investments can go down as well as up and you may not get back what you put in.

It also allows you to pass on any money you have left in your pension to your loved ones when you die. 


  • You have the flexibility to take your money out as and when you need it.
  • You can manage your money in a tax efficient way, over a number of years.
  • Any money left in your pension can be passed to your loved ones when you die. However there may be tax considerations involved here, so we’d recommend obtaining financial advice to ensure your needs are met.
  • You’ll have the option to choose your investment funds, so your money could carry on growing.


  • You could run out of money before you die. How much you withdraw, fund performance, inflation and charges will all have an impact on how long your money will last.
  • Any money you haven't withdrawn remains invested. It's important to make sure you're invested in the right funds for you. Also, investments can fall as well as rise and you may not get back what you put in.
  • Any money withdrawn after taking your tax-free cash is treated as a taxable income. This means it could increase the amount of tax you pay. For example, you may be a basic rate tax payer but your withdrawals from your pension move you into the higher rate threshold. Tax rules can change and the impact of taxation (and any tax relief) depends on your circumstances.

Some examples of using this option

Steve is 60 and has decided he wants to work part-time. He wants to access some of his pension savings to pay off some debt and pay for some urgent house repairs. His current pension pot is £100,000 and he has worked out that by taking his 25% tax-free cash he can take £25,000.    

Steve takes his full 25% tax-free cash as a lump sum;  £25,000

He leaves the remaining £75,000 invested

Steve gets the £25,000 he needs and can take the rest of his pension whenever he needs its.

The rest will be taxable, but as it's invested it has the chance to grow, of course it could fall too and he could end up with less than he started with.

This isn’t a real life example or a recommendation.

Gillian is 60 and is retiring with a pension pot of £50,000. She wants to start taking regular income from her pension savings and wants to take her full 25% tax-free cash up front to pay for some new windows for her house. 

Gillian takes 25% tax-free cash at the start; £12,500

This leaves £37,500 as a taxable amount . She decides to take £2,000 each year.

Gillian can change this amount if she wants either up or down or stop taking an income altogether. It remains invested, so it can grow (but also fall). She'll need to keep an eye on her income and review her fund choices to make sure her pension lasts as long as she needs.

This isn’t a real life example or a recommendation.

Calculators and tools to help you plan

How much you could get from your pension

Our calculator will help you understand how the options could impact your retirement income. You can use it to understand what your pension pots can provide. It will also show you the buying power of your money by taking into account the effects of inflation.

Please read all of our assumptions to understand how we’ve worked out the amounts. 

The results are not a recommendation and not financial advice.

Launch Pension pot calculator


How long your money could last

This planner shows you how taking different amounts of money from your pot can impact how long your money might last. You can input different amounts and see the impact it has.

Launch Retirement Income Planner


How tax could affect your income

This calculator will provide an estimate of how much Income Tax you may pay, depending on how much money you take from your pension. You can input different amounts in the box that asks for your gross salary and see roughly how much tax you might have to pay. 

Launch Income Tax and Tax Relief calculator


How much Emergency Tax you might pay

This tool is to show you how much Emergency Tax you might have to pay on withdrawals from your pension pot.

Launch Emergency Tax tool

See all calculators and tools


Important Q&As

Yes, and it’s a good idea to keep on top of your investments as your needs might change over time and you might, for example, be willing to take less risk with your money as you get older. An adviser can help with these decisions. Remember, the value of your investment can go down as well as up, so you might get back less than you put in.

No. You can take as much of your tax-free cash as you need and take the rest later.

No, you have the control and flexibility over when you access your money and how much you wish to withdraw. 

No, if you don't take the full 25% tax-free cash, any money left in your pension pot, could grow including any remaining/ unused tax-free cash. Though as with any investment your money could go down as well as up.

Looking for help?

Retirement and pensions can be tricky to understand. A financial adviser will guide you through the options and recommend the right solutions to meet your needs.

If you don't already have an adviser, we can help you find one.

Find an adviser

Other access options

Take a guaranteed income for life

(also known as an "annuity")

Find out more about this option

Take a combination of tax-free and taxable

(also known as "take some or all pension as cash")

Find out more about this option

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.

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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 or call 0800 280 8880 to book a phone or face-to-face appointment.


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