Before accessing your pension pot

Estimate your future retirement income. First, calculate your potential retirement income. You can do this in a few simple steps, from requesting State Pension statements to tracing lost pensions.

• Combine your pensions 
  Do you have multiple pension pots? Do you know your total savings? Managing several pensions is hard. Consolidating them into one pot makes tracking easier. It helps you make clear decisions about your total money.
  
  
• Check your savings goal
  Are your pension savings enough for your lifestyle? Review ways to prepare for retirement. This step helps you choose the best time to stop working.
  
  
• Review special benefits
  Check your current pension plans for any valuable benefits. Look for a Guaranteed Annuity Rate or a Guaranteed Minimum Pension. Review these benefits first so you do not lose them. 
  
  
• Your State Pension
  
  
  • Check your State Pension age
    The State Pension Age Calculator will tell you when your State Pension is payable.
  • Find out how much your State Pension is worth
    Get an estimate of your State Pension at the GOV.UK site.
  • Boost your National Insurance (NI) contributions.
    If you have an NI contribution record of less than 35 years, you won't receive a full State Pension. Find out how to add to your contributions.
  • Find out if you qualify for Pension Credit.
    If you're on a low income, the Pension Credit Calculator can tell you if you're eligible for this benefit.
  • Consider delaying the State Pension
    If you choose to defer your State Pension, it could be higher when you start to take it. Find out more.

It's possible that you've had several pensions throughout your working life. There are various ways you can find lost and forgotten pensions.

You can trace your pensions by using the Government's Pension Tracing Service and contacting your previous employers and pension providers yourself.

The decision to transfer a pension may not always be a straightforward one. Whilst there can be advantages, there are risks that you need to consider too.

Understanding how your pension benefits will be taxed is an important part of developing your retirement income plan.

You can usually take up to 25% of your pension pot as a tax-free lump sum subject to the availability of any allowances. Tax on income you receive from a pension is then calculated in the same way as any earnings from employment. For most people there’s an annual personal allowance, which means that you can have an annual income of up to £12,570 (2026/27 tax year) that’s not taxed.

Your total income could include:

• The state pension you get (either the basic state pension or the new state pension)
• Additional state pension
• A private pension (workplace or personal)
• Earnings from employment or self-employment
• Any taxable state benefits you get
• Any other income including that received from investments, property or savings.

In England, Wales and Northern Ireland income above this is subject to tax at rates of 20%, 40% or 45% depending on your overall total taxable income. In Scotland it's 19%, 20%, 21%, 42%, 45% and 48% depending on your overall total taxable income.

If you have any further questions around how tax could affect your retirement, you can find additional support on the Money Helper.

If you, or your partner, are receiving, or entitled to state benefits, you may need to declare any money you take from your pension pot to the Government. State benefits include:

• universal credit
• child benefit
• or anything similar where the amount you receive depends on how much you earn or have in savings.

This could have an impact on the level of benefit you’re entitled to.

There are a wealth of benefits available to pensioners. Winter fuel allowance, free bus travel and prescriptions are just a few.

For more information visit the gov.uk website.

Working has many benefits. You can work full or part-time. Working boosts your income. It keeps you active. It also fits around your lifestyle.

The MPAA tax rule

Taking money from your pension can limit future savings. It may lower your tax-free contribution limit. This rule is called the Money Purchase Annual Allowance (MPAA).

Yearly contribution limits

Most people can save up to £60,000 each tax year. You get tax relief on this full amount. This limit includes payments from you and your employer. However, triggering the MPAA cuts your limit to £10,000 a year. This lower limit applies to the 2026/27 tax year.

You should also consider how your money will be treated at the time of your death and whether there’s enough money left to provide for your dependants.

With some options your money may be subject to inheritance tax, so it’s important to consider this before you decide.

Inheritance tax

You can pass on assets up to the value of your nil rate band (NRB) without the need to pay an inheritance tax bill. The nil rate band is £325,000 for 2026/27.

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000 in total, due to the residence nil rate band.

The residence nil rate band (RNRB) is an additional £175,000 which, if the conditions are met, can be combined with the nil rate band of £325,000 giving you a potential combined allowance of £500,000. 

For married couples or those in a civil partnership where the nil rate band and/or residence nil rate band is not fully utilised on first death the remaining threshold passes to the surviving spouse or civil partner so it can be applied against their estate following their death.

For spouses or registered civil partners it can mean up to £1 million to set against their estate. You can only qualify for the full residence nil rate band if the estate is below £2 million. If you have a larger estate, the residence nil-rate band reduces gradually to nil, this is known as 'tapering'.

Further information on unused allowances can be found at Gov.uk.

Beware of scammers. It's now illegal to cold call, so your alarm bells should ring if someone contacts you unexpectedly about your pension.

Be particularly wary of people that claim to be approved government advisers and try to persuade you to take money from your pension. For more information about scams please visit fca.org.uk/scamsmart.

Pension Wise is a free and impartial government service, provided by MoneyHelper. This service is in place to help you understand what you can do with your pension money.

Available if you’re 50 or over, they offer telephone or face-to-face appointments with highly trained professionals. In your appointment you’ll get:

• Guidance on how to make the best use of your money (they won’t give a recommendation).
• Information about tax when taking money from your pension.
• Tips on getting the best option for you, including how to compare products, get financial advice and avoid scams.

The availability of appointments can vary between a few days and several weeks, so if you need guidance, it's a good idea to book an appointment slot now: