Yes, from age 55 (the government proposes to increase this to age 57 from 2028), you can take your whole pension pot and use it however you want. However there could be large tax implications and therefore it may be more tax efficient to take the money in stages, leaving the rest invested. Also, if you:
- ‘recycle’ your tax-free cash lump sum back into another pension scheme, you could incur a 40% charge.
- take the whole lot (or even a partial amount) as a lump sum, this will reduce the amount you can pay into a pension scheme (annual allowance) in a tax year. For the current tax year of 2020/2021 this would be reduced to £4,000 (this is known as the money purchase annual allowance).
You’ll receive 25% tax free and the remaining 75% will be taxed at your highest income tax rate.