If you have £10,000 or less in your pension pot, you may be able to cash in the whole lot from your normal minimum pension age.
The first 25% lump sum you take is tax-free (limited to a lifetime maximum of £268,275 unless you hold protection for a higher amount). The remaining amount is taxable, as if it were income, at the highest marginal rate you pay.
- For each occupational pension pot you own (like People’s Pension), you can cash in the proceeds as a small pot lump sum once you’ve stopped paying in. You can do this once for each pot, and you must take the entire pot at once.
- You can cash in up to 3 personal pension pots during your lifetime.
- Unlike taking an uncrystallised funds pension lump sum, a small pot lump sum won’t reduce your annual allowance (the limit on the amount you can save and receive tax relief on).
- HMRC has complex rules on whether you can or can’t take a small pot lump sum. This can include different criteria for transferring pension schemes, so make sure you get guidance and advice.
- If you’re claiming a small pot lump sum with People’s Pension, you can start the process over the phone, requesting a printed claim form, or through your account. We’ll then let you know if there’s any reason you can’t go ahead.
More about your different options for taking your pension savings