If you have £10,000 or less in your pension pot, you may be able to cash in the whole lot from age 55 (or age 57 from 2028).
The first 25% of cash you take is tax free. The remaining 75% is taxable, as if it were income, at the highest rate you pay.
- You can cash in any number of occupational pension pots in this way (like The People’s Pension).
- You can cash in up to three personal pension pots during your lifetime.
- Unlike flexible lump sums or flexi-access drawdown, a small pot lump sum won’t reduce your annual allowance (for tax relief on money you save into your pension in the future).
- HMRC have 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 The People’s Pension, you can start the process over the phone, requesting a printed claim form, or through your Online Account. We’ll then let you know if there’s any reason you can’t go ahead.