Taking your pension pot a bit at a time

Collect the fruits of your labour bit by bit - giving the rest a chance to carry on growing

There’s two ways of taking your pension pot a bit at a time as flexible lump sums.

As with all of your options, overall you’ll get 25% of your pension pot tax free, and you’ll pay tax on the remaining 75% of it.

But if you’re taking it a bit at a time – you'll need to decide how you want to take your 25% tax-free cash.

Why would someone choose to take their money a bit at a time?

These options will work differently for different people, depending on a whole range of circumstances and factors.

That’s why we always recommend you get guidance and advice as well as doing your own research.

But generally, tax is a major deciding factor when choosing which way you want to take your pension pot.

The income tax you pay is calculated on a yearly basis. So it’s important to consider whether adding the money you take from your pension to your other income for a certain year could push you into a higher tax band. If this happens, it could mean you pay more tax than usual.

By taking money from your pension pot a bit at a time over a number of tax years, you could plan your income so that you stay within a lower tax band.

Two ways to take it a bit at a time with The People's Pension...

If you want to take your pension pot a bit a time with us, you’ll need at least £10,000 in there to get you started. We offer two ways of taking your pension pot a bit at a time…

1. Take your tax-free cash gradually with us

The first way you can take your pension pot a bit at a time with us involves taking your tax-free cash gradually over a period of time.

So each time you take money from your pension pot, 25% of it is tax free and you pay tax on the other 75% of each lump sum.

The tax man calls these lump sums ‘uncrystallised funds pension lump sums’ or ‘UFPLS’.

Find out how taking your tax-free cash gradually with us works »

2. Take your tax-free cash up front with us

The second option with us is to take your 25% tax-free cash at the start and move the remaining 75% into a separate account.

Then, each time you take money out of that account, you’ll pay tax on the full amount of each lump sum.

This method of taking your pension pot a bit at a time is often called ‘flexi-access drawdown’.

Find out how taking your tax-free cash up front with us works »

 

 

Consider combining your pension savings

If you’ve got more than one pension – you might want to think about putting them all in one place so that they’re easier to manage.

The amount you have in your pension pot affects which options you can take your money through. So by combining your pension savings into one, you could change the options available to you.

It’s also important to compare the charges, features and services between the pension you want to transfer out of and the pension you want to transfer into – to make sure it’s the best option for you.

Find out what else you should consider before transferring »

Should you combine your pensions before taking it a bit at a time?

If you want to take your pension pot a bit at a time with The People’s Pension, you need to have more than £10,000 in your pot to get you started.

So if you have less than £10,000 in your pension pot with us at the moment – you might be able to take your amount over £10,000 by transferring your other pensions into your pot with us. And that would mean the option of taking your pension pot a bit at a time would become available to you.

Combining your pension savings with
The People's Pension

You could transfer your other pensions into The People’s Pension. It’ll be easier to keep track of them in one place and you could save money on charges too…

If you’re unsure what’s right for you, it’s a good idea to consider getting advice. Otherwise, if you’re comfortable making financial decisions, all you need to do is give us the details of your other pensions (either online or by post) and we’ll do the rest.

What’s the difference?

1

Taking your tax-free cash gradually with
The People's Pension

Find out more »
2

Taking your tax-free cash up front with
The People's Pension

Find out more »

Does The People's Pension offer this option?

Yes

As long as you have more than £10,000 in your pension pot.

More about taking your tax-free cash gradually with us »

Yes

As long as you have more than £10,000 in your pension pot.

More about taking your tax-free cash up front with us »

Will I pay tax on the money I receive?

Will this option affect my tax relief if I want to continue saving into a pension?

Is the money guaranteed to last for the rest of my life?

Do I have any other choices, once I have selected this option?

Can I leave money to someone when I die through this option?

What are the risks?

How do I choose this option with The People's Pension?

All your options at retirement Keep your money where it is Take it all in one go Take it a bit at a time Buy a guaranteed income or 'annuity'

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Explore your retirement options

Retirement planning = big decisions

Find out where to get help (our website, Pension Wise or LV= to name but a few).

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