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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.
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.
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.
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.
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Pension Access is a trading name of Harbour Rock Capital Limited which is registered in England & Wales as a Limited Company, No. 10290349. Authorised and regulated by the Financial Conduct Authority, No. 754580. Registered Offices: Affinity House, Beaufort Court, Sir Thomas Longley Road, Rochester, Kent, ME2 4FD. Telephone: 0800 304 7600. Email: pensionaccess@harbourrockcapital.co.uk
Your FREE information pack contains all the information you need to make an informed decision on wheter or not taking tax free cash from your pension is right for you.
Get your Free Info Pack
Complete the form and we'll send you an information pack in the post
Note: We are unable to advise on the state pension or any pension you are already taking an income from.
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What's in your info pack?
Taking pension money early isn’t right for everyone because it could leave you with a lot less to live on in retirement. That’s why it makes sense to talk with a regulated financial adviser first.
There is no obligation at all and if you choose to get a check of your pensions then we also include a pre-paid envelope and a consent form so we can access details of your pensions.
Your FREE information guide contains all the information you need to make an informed decision on whether or not taking tax free cash from your pension is right for you.
We're on hand in case you have any questions, and we aim to make the process of withdrawing cash from your pension as simple as possible.
We are regulated by the Financial Conduct Authority so you can rest assured that any advice we give will be based on your best interests.
Get your FREE info pack
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