Pension lump sums

Taking money from your pension as and when you need it.

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Pension lump sums: explained

From 55, with the right kind of pension, you can take money from it as and when you want. If you take this approach, rather than drawing a regular income, it is called taking lump sums. And the first 25% you take is tax free, either as one lump sum or as several smaller amounts.

lady sitting on the sofa with laptop and a cup of tea | Pension lump sums

Releasing pension money early isn’t right for everyone as it will leave you worse off in retirement.

Be tax-smart with your pension savings

How much pension money you withdraw early can have a big impact on your tax bill and on the size of your future pot.

Let’s take a look at John and Sarah. Both have a £70,000 pension at age 55 and pay the basic rate of tax. They both need £17,500 to cover a financial situation. Sarah takes just her tax-free cash allowance to achieve this. While John decides to take £40,000, putting the balance in his bank account for a rainy day.

¹ Tax treatment depends on your individual circumstances and may be subject to change.

How to manage your lump sums

As you can see from the example of John and Sarah, the amount of money you withdraw from your pension can have a big impact on the tax you'll pay. And if John decided to take more lump sums between 55 and 65 his tax bill could be much higher, his pension a lot smaller and the interest he receives from his bank account minimal. The bottom line is: the more you can keep in your pot, the more money you should have for retirement.

That’s why it makes sense to have a chat with a regulated financial adviser before making any final decisions about your pension.

Couple sitting down looking at their pension savings paperwork

Get started for free

We can check to see if pension lump sums are right for you. Our initial investigation into your pension is free. And in most cases we can continue to provide full advice with no obligation. At any stage you can choose to walk away, better informed and with nothing to pay.

Get started

How it works in 3 easy steps

With our no obligation pension check discover if pension lump sums are right for you.

Your permission

Complete and return a simple form giving us your permission to check your pension.

We analyse

Our team gathers and analyses all the information we need about you and your pension.

Your decision

We’ll send you a report, clearly stating what we think you should do. The choice is then yours.

If you decide to release some of your savings, we can take care of everything. This includes managing your pension for you. We would let you know in writing what the fee would be. Or, you can choose to walk away with nothing to pay.