Taking your pension pot all in one go

Harvest all the fruits of your labour in one go

You could take your whole pension pot as one lump sum.

But 75% of it will be taxed in the same way as other income like your salary – so by taking it all in the same tax year, you could end up with a big tax bill.

Plus, you'll need to plan how you're going to provide an income for the rest of your life. If you’re relying on this money to live on, you’ll need to make it last. And that could be tricky, because you don’t know how long you’re going to live.

How does taking your whole pension pot in one go work?

£10,000 or less in your pension pot…

If you have £10,000 or less in your pension pot and you want to take it all in one go – you may be able to take it as a ‘small pot lump sum’ – as long as you meet all of HM Revenue & Customs’ (HMRC’s) rules about when a small pot lump sum can be taken.

There are different rules depending on what type of pension you have:

  • With occupational pension pots (like The People’s Pension), you can take as many as you want as small pot lump sums.
  • But you can only take up to 3 personal pension pots as small pot lump sums in your lifetime.

More than £10,000 in your pension pot…

If you have more than £10,000 in your pension pot and you want to take it all in one go – you might be able to claim it as a single lump sum.

The tax man calls this a single ‘uncrystallised funds pension lump sum’ or ‘UFPLS’.

With some providers, you can take a pension pot of £10,000 or less as an UFPLS instead of a small pot lump sum if you want to. But to keep things simple, here at The People’s Pension we just offer:

  • small pot lump sums for £10,000 or less
  • and UFPLS for more than £10,000.

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 in one go?

If you make the total amount in your pension pot more than £10,000 by transferring other pensions into it, you won’t be able to take it as a small pot lump sum anymore.

And with us, if you have £10,000 or less in your pension pot, you won’t be able to take it as an ‘UFPLS’.

So it’s worth understanding the difference between these two options – and weighing up the pros and cons of each – before you decide whether or not to combine your pension pots…

Combining your pensions 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 a pension pot of £10,000 or less in one go with The People's Pension

2

Taking a pension pot of more than £10,000 in one go with The People's Pension

Does The People's Pension offer this option?

Yes

As long as your pension pot with us is £10,000 or less, and you meet HMRC’s rules around small pot lump sums. So you must have stopped paying into your pension pot with us, and we also need to have received all outstanding payments from your employer.

Yes

As long as you have more than £10,000 in your pension pot with us, you can take it all in one go as an ‘UFPLS’.

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 income 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?

Comparing with other providers

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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Where to get guidance and advice

Retirement planning = big decisions

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

Explore your guidance and advice options »