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 flexible lump sums. People’s Pension offer two ways of flexibly accessing your pension savings.

Taking your tax-free lump sum up front – flexi-access drawdown

The first way of taking your pension pot a bit at a time is to take up to a 25% tax-free lump sum up front either in chunks or in one go. Under HMRC rules, for every £1 you take as a tax-free lump sum, £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 (either as lump sum withdrawals or a regular income) you may pay income tax on the full amount of each withdrawal.

With flexi-access drawdown, taking your tax-free lump sum up front doesn’t trigger your money purchase annual allowance (MPAA). But after your first withdrawal from your flexi-access drawdown account it will.

Find out more about taking your tax-free lump sum up-front.

Spreading your tax-free entitlement 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 entitlement 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 entitlement across all withdrawals, your money purchase annual allowance is triggered when taking your first lump sum.

Find out more about spreading your tax-free entitlement 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.