You don’t have to use the money in your pension pot as soon as you reach retirement age. You can choose when you start using it. If you don’t need your pension income now you can leave it where it is. This may give your pension pot more time to grow.

Not all providers offer the same options so you should check carefully before deciding what to do and get financial advice if necessary

Remember, anything you leave invested in your pension pot can go down as well as up in value depending on how it performs. In addition, it’s important to note that some choices you make now may be irreversible which could affect your retirement income for the rest of your life.



Combine your options

You can combine options to best meet your circumstances and needs. Take advantage of tax-free cash, leave part of your pension pot invested, purchase a regular income retirement product with part of your pot. It’s up to you.

 

Things to consider

LIFE EXPECTANCY - DON'T RUN OUT OF MONEY

With increased life expectancy, retirement planning is becoming ever more critical to ensure you’re not left reliant on the State. Take a look at our Life Expectancy page to find out more.

INCOME TAX

75% of withdrawals from your pension pot are taxed as income. The exact amount of tax you pay depends on your personal circumstances. Unless you need the money, consider limiting the amount you take or taking your cash in stages to keep you within your current tax band.

INVESTMENT RISK

Anything you leave invested in your pension pot can go down as well as up in value depending on how the fund performs.

INHERITANCE

If you leave your money in your pension pot, then on your death it will usually pass to your beneficiaries free of inheritance tax. If you take money out of your pension, you may lose any inheritance tax protection on that money as it will be treated differently for inheritance tax purposes.

PENSION CREDIT AND STATE BENEFITS

Cash or income taken from your pension pot may impact your pension credit and State Benefits. To find out more visit entitledto.co.uk.

PENSION SCHEME RULES

Some pension schemes don’t allow withdrawals or may limit how many withdrawals you can make. If your provider doesn’t give you the freedom you want, you can move your pension to another pension product that does.

PENSION WISE (FREE, IMPARTIAL)

To help you understand what your options are and how they work, the Government offers a free and impartial pension-guidance service called Pension Wise.

We strongly recommend that you take advantage of this service before you make your decision.

Take a look at our How to choose page to find out more.

IT PAYS TO SHOP AROUND

You can choose from a range of retirement income products and options. You don’t have to stay with your current provider and you may get a better deal elsewhere.

We recommend that you shop around and seek financial advice before you buy.

Take a look at our How to choose page to find out more.

Your next steps

Ready to find out more?

Select one of the options below:

Or move on to the next section

Our case studies which illustrate some of the options available and the important considerations to be aware of.