If you’re age 55 or over (or earlier if you’re retiring due ill health), and you have more than £10,000 in your pension pot with us, you can take out lump sums. The People’s Pension offer two ways of flexibly accessing your pension savings.

Taking your tax-free cash up front – flexi-access drawdown

The first way of taking your pension pot a bit at a time is to take up to 25% tax-free cash up front either in chunks or in one go. Under HMRC rules, for every £1 you take as tax-free cash, £3 will be moved to a flexi-access drawdown account that we’ll set up for you.

Then, each time you take money out of your flexi-access drawdown account, you may pay income tax on the full amount of each lump sum. With flexi-access drawdown your money purchase annual allowance (MPAA) isn’t triggered when you take the initial 25% tax-free cash, it’s only triggered once you take your first withdrawal from the remaining balance of the 75%.

Find out more about taking your tax-free cash up-front

Spreading your tax-free cash across all withdrawals– UFPLS (uncrystallised funds pension lump sum)

The second way to take your pension pot a bit at a time is to spread your tax-free cash across all withdrawals.

So, each time you take money from your pension pot, usually 25% of it is tax free and the remaining 75% of each lump sum is taxable. If you spread your tax-free cash across all withdrawals, your money purchase annual allowance (MPAA) is triggered when taking your first lump sum.

Find out more about spreading your tax free cash across all withdrawals

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.

Find out more about taking your pension pot a bit at a time