Lump sum

Taking a lump sum

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So how does that work?

Lets explain...

Once you reach retirement age you can take out some or all of your money from your pension pot. Depending on your pension there will be restrictions of what age you need to reach, before you can access your money.
What’s more, you can take up to 25% completely tax-free in addition to the yearly tax-free allowance for income and leave your remaining pension fund invested.

Important Information about taking a lump sum

You can choose to take all your savings out as a lump sum

You have control over the cash you take from your pension and can choose what to spend it on.
The 25% tax-free lump sum is usually still available for you with this option.

If you have a large sum of money in your pension and take it all at once this could push you into a higher-rate tax bracket leading to a higher tax bill and less cash for you.
If you use your cash sum to pay off debts or make a big purchase you may have little or nothing left to give you an income in retirement.
Once you’ve taken your cash out, you can’t usually change your mind.
If you do spend all your cash from your plan and don’t have any other pensions, investments or savings you may only have the State Pension to live on in your retirement.

TAX-FREE CASH IMPORTANT INFORMATION

Here's what you need to know

Taxable pension income includes earnings from employment or self-employment, investments, the State Pension and other taxable benefits and income, such as money from a property rental.
Any balance above the 25% tax-free sum will be added to any other income you have and taxed.

The money is yours to spend however you like. You can take 25% of your pension savings as a tax-free lump sum. You also have the option to take it all in one go, although this will need careful consideration as you could end up with a large bill. Even if this is still something you want to do, we recommend seeking professional financial advice to help you withdraw your cash as tax efficiently as possible.
Any references we make to taxation are based on our current understanding of current legislation and HM Revenue & Customs practice, which can change.

Calculators

Use our tools to dig deeper into how you can use your pension savings

Annuity Calculator

Using today's rates our calculator can give you a snapshot of the income your savings could buy you in retirement. You can also choose to add your health details to personalise your quote even more!

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Fixed Term Annuity Calculator

Our fixed term annuity calculator gives up to date results based on current rates. We shop around the whole of the market to get you the best quote for your specified income and/or guaranteed maturity value.

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