The earliest you can normally access your pension pot (if you’re not in ill health) is when you’re 55 years old (rising to 57 in 2028) although some schemes have rules which mean you may not be able to take your pension until later.
There are a number of different ways to access your pension pot.
- You could delay taking money from your pension pot so you can consider your options. Reaching age 55 or the age you agreed with your pension provider to access your pot isn’t a deadline to act. Delaying taking your money may give your pension pot a chance to grow, but it could go down in value too.
Find out more about keeping your pension pot where it is
- You could use your savings to buy a guaranteed income which will last as long as you live – otherwise known as an annuity. You can still take a 25% tax-free lump sum if you want to but then use the rest to purchase an annuity. Your guaranteed income will be taxed at your normal rate. There are many different options when selecting an annuity and those with added features will cost you more. We don’t sell annuity products so using your pension savings to buy an annuity from us when you access your pot isn’t an option. We can help you transfer to a provider that does though.
Find out more about buying a guaranteed income (also called an ‘annuity’)
- You could use your pension pot to provide you with a flexible retirement income with B&CE (known as ‘flexi-access drawdown’). This means that you can take regular payments from your pot whilst any money left remains invested. You set the income you’d like to receive but this may be adjusted depending on the performance of the funds you’re invested in. Your income isn’t guaranteed for life, so you’ll need to manage your investments carefully. A quarter of your pension pot can usually be taken tax free and any other withdrawals will be taxed whether you take them as income or as lump sums.
Find out more about taking your pension pot a bit at a time, taking your tax-free cash up front
- You could take your pension pot as a number of lump sums as and when you need. Each time you take a lump sum, normally a quarter of it is tax free and the rest will be taxed. Your pension provider may charge you for each withdrawal.
Find out more about taking your pension pot a bit at a time, taking your tax-free cash gradually
- You could take your whole pot as cash. The first 25% of this will be tax free, however the rest will be taxed at your highest tax rate. It’s possible that this will increase the amount of tax you pay, which may not make this option worthwhile.
Find out more about taking your pension pot all in one go
You don’t have to choose just one of these options – you can choose a variety of options if you like, and take income or lump sums at different times to suit your needs.