Perusing your pension pot

In April last year, people aged 55 or above were given easier access to their pensions and a choice of what they did with their pension pots. We still get asked lots of questions about this so thought this simple guide would be helpful.

Anyone aged 55 or above can take cash out of their pension. You can take all of it, some of it, buy an annuity, opt for an income drawdown or choose a combination of them all.

Cashing it all in

Whilst it may sound tempting you need to consider the following:

-Only 25% of your pension funds are tax free, the remainder is taxed at the normal rate. If you are still working the money will be added to your income and could easily push you into the 40% tax bracket.

-Your pension pot is meant to fund your retirement, spend it all too soon and you will only be left with the state pension to live on during retirement.

Lifetime annuities

These will turn your pension funds into an income throughout your retirement. The rates can vary a lot so it is advisable to shop around for the best one. Lifetime annuities provide peace of mind as you get older.

Multiple cash withdrawals

Only the first 25% of each cash withdrawal is tax free. You should check with your pension provider as there could be limits on the amount of withdrawals you can make each year, and some providers charge you each time you withdraw.


Many people choose to take 25% of their pension pot in tax free cash and move the rest into funds that allow an income drawdown. The amount you will receive will depend on how your investments are performing.

Remain in a pension

If you want to you can carry on saving into a pension, you will get tax relief up to the age of 75. It is your choice what you do but it will depend on:

-The size of your pension pot

-When you stop work

-What your retirement goals are

-Your age and health

-Whether you have financial dependents




If you need help or advice on accessing pension funds, please call us on 01928 735510 or complete the contact form and one of our pension advisers will call you back.