Your options for taking your money
Choosing to take your money from your pension pot is one of life’s big decisions. You’ve worked hard and paid in money over the years. You’ll want to be sure you’re making the right choice so that your future is secure.
You can access your pension savings at your selected retirement age, or any time after age 55, whether or not you’ve stopped working. You may be able to access them earlier than this if your original scheme had a protected retirement age, or if you’re in ill health. If you get close to your chosen retirement age and decide you don’t want to take your money yet. You can also delay taking money from your pension pot.
Getting help to decide
It’s important you shop around to find the best option for your personal circumstances and income goals. It’s a big decision so it’s worth comparing what each provider can offer as you don’t have to stay with Legal & General and might get better options elsewhere.
Pension Wise is a free and impartial service backed by the government who will help you shop around and make sure that the decisions you’re making are the right ones for you. You can book an appointment once you are aged 50 or over.
You can also choose to receive personalised advice from a financial adviser. You can find one in your local area at unbiased.co.uk.
Advisers usually charge for their services. You may be able to pay for financial advice directly from your pension pot. Ask your financial adviser for details.We can offer you a way of paying your adviser directly from your pension pot, this is called a facilitated adviser charge. The Facilitated adviser charge guide explains how this works.
Find a financial adviser in your local area at unbiased.co.uk.
Your options under your current plan
Options available to you within your current plan
Things to consider
Take it all in one go
You can take your pension pot in cash as a single lump sum.
- 25% of it will usually be tax-free but the rest may be taxed as income.
- You don't need to stop working to take this option, but you would need to think about where your income will come from when you do stop working.
Take it in a series of cash lump sums
You can leave your money invested and withdraw it as cash lump sums as and when you wish. The money left invested has the chance to grow but it could go down in value too.
- Usually the first 25% of each amount you take will usually be tax-free but the rest may be taxed as income.
- If you choose this option, you may wish to spread your withdrawals over a number of tax years to minimise the amount of tax you pay.
Take a flexible income
You can usually take up to 25% of your pension pot as a cash lump sum and leave the rest invested to provide a regular income, and occasional lump sums if required. This is often referred to as flexi-access drawdown.
- You can usually take up to 25% of your pension pot as tax-free cash but the rest may be taxed as income.
- You can vary, stop or suspend the amount you’re taking at any time.
- Your money has the chance to grow but it could go down in value too. If you take out too much or your investment funds don’t perform as well as you’d expected, you could run out of money before you die.
- It’s important to choose an investment approach for the money left invested that best suits your objectives for the future. Find out more about your investment options with a flexible income.
Get a guaranteed income
You can usually take up to 25% of your pension pot as a cash lump sum and use the rest to buy a guaranteed regular income for a fixed period or for the rest of your life. This is known as an annuity. Annuities have a number of features, for instance you can arrange for payments to continue to your dependents after your death.
- You can usually take up to 25% of your pension pot as tax-free cash. Each annuity payment may be taxed as income.
- Smokers and those in poor health usually get better rates because of their shorter life expectancy.
You can choose more than one option and provider
You don’t just have to choose one option or provider. You can mix your options for each pension pot you have. You can transfer all or some of your pension pot to another provider and have your benefits paid by them. However, you may lose your entitlement to any benefits that were protected, such as the ability to combine your defined benefit and defined contributions pots, the ability to access your pot before 55 or a tax-free cash sum greater than 25% of your pot. Please check this before transferring.
The law, tax rates and any allowances may change in the future. These changes could affect the value of your savings, how much you can pay in, or the age at which you’re able to access your money.
How tax works for you will depend on your individual circumstances.
Ready to make a choice
Once you’re ready to take your money and you’ve decided which option (or options) you want to take, you can get in touch for all the information you need and any relevant forms.
We’re here to help if you have any final questions or you need any more information before you make your decision, just let us know.
We’ll write to you every five years from age 50 with a summary of your plan including its current value plus a series of risk warnings and things to think about before taking your money out.
The communications will continue until age 95 or until your entire pot is crystallised (ie you’ve started taking your benefits) whichever comes first.