Time to access your pension?
Your pension will likely be your main source of income in retirement, so let’s get it right.
Knowing how to access your pension in the right way for you, and as tax-efficiently as possible, can be difficult.
When it's time to access your pension, our advisers can help
From age 55 (rising to 57 in 2028) you can access your pension savings. You can keep working if you want, but it marks a good time to start thinking about how you’ll take your retirement money.
You can usually take 25% as tax-free cash – either as a lump sum or bit by bit in smaller portions. The remaining 75% is subject to tax. It’s not necessary to take cash if you don’t want to, though. The remaining portion of your pension (or all of it if you don’t take 25% tax free cash) can be used to buy an annuity, a flexible income, or taken as cash. Tax will depend on your circumstances, including where you live, and the options you choose. Tax rules can also change in the future.
It's natural to have some questions about accessing your pension. Our advisers can talk you through your options
Buy a guaranteed income
Also known as an annuity, buying a guaranteed income for life gives you just that. It works by using some or all of your pension pot to set up a regular income. You’ll always know what to expect, but once it’s set up it can’t be undone so it’s not the most flexible option. And you might get back less than you paid in, depending on how long you live. We can help you decide whether this is a good option for you and can set it up for you if that’s what you decide.
Set up a flexible income
Also known as drawdown, your pension will remain invested and you can choose how much to take and when. There’s a lot of flexibility with this option, but you could risk taking too much at any point and your money might not last you through all of retirement. We use cash flow projections to predict how far your money could go and make tax-efficient recommendations regarding how much income you can afford to take now, in the future, and should leave invested. You can get advice on retirement planning at any age – the earlier the better. But remember it’s never too late to put plans in place or discuss your options with a qualified financial adviser. We can look at your situation and recommend which steps to take, based on where you are in life.
Cash in your pension
You can take your whole pension pot in one go, as a lump sum. Normally the first 25% is tax-free, but on the remainder, you could lose 20%, 40% or even 45% to income tax, if it pushes you into a higher tax bracket (especially if you’re still earning). We can help you plan how you’ll provide an income for the rest of your life.
Combine your options
It’s your pension and you have the freedom to take it in a way that works for you. You could achieve a balance of guaranteed income and flexibility by using a portion of your pension to set up an annuity, with the rest going towards drawdown. We can help you understand the right split to live the life you want in retirement.
Leave it untouched
Not ready to take your pension? Leaving your pension pot untouched could give it more opportunity to grow. But remember it could also drop in value. We can help by making sure your money remains invested in the best way for you. We’ll perform regular reviews to make sure everything’s on track, and you can take comfort knowing your money is working hard for when you need it.
