Your options summarised

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We can’t provide guidance or advice about how to take your pension savings, but a specialist can. Get help with finding the right help and visit our Guidance and advice page.

There are plenty of options available to you for using your pension savings. Below is a summary of those options, and you can click on the name of each one for more detail.

If you haven’t already, don’t forget to read about how to plan first.

Your options


You can choose one of these options, or a combination

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Leave it invested

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You can leave some, or all, of your pension savings invested for now. 

This might be the right option for you if you’re still considering your options or have other income to rely on for the time being.

Considerations

  • How much longer will I want to be investing my pension savings?
  • Do I know which option I might want to take when I do retire?
  • Do I want to keep building up pension savings?

How it’s taxed?

By leaving your pension savings invested, you will maximise the amount you can pay in tax-free.

Take it as cash

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You can take some, or all, of your pension savings as cash. 25% of that can be tax-free. 

Depending on how much you take as cash in one go, the tax on it could be much higher than you’re used to.

Considerations

  • Will I have other income in retirement as well?
  • How long will my money last?
  • Do I want to keep building up pension savings?

How it’s taxed?

Normally, up to 25% of your pension savings can be taken tax-free. The rest will be taxed like income when it’s paid to you.

Remember: this could affect the amount you can pay into your pensions in the future. Find out more about that here.

 

Take it as regular income

(Annuity)

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You can take up to 25% of your savings as tax-free cash and then use some, or all, of your remaining pension savings to buy a guaranteed income for life. This is also known as an annuity. 

You can choose different features and options to protect your income for your family if something happens to you.

Considerations

  • What happens to my income when I die?
  • What are my priorities in retirement?
  • Have I considered all my options?

How it’s taxed?

Up to 25% of your pension savings can be taken tax-free. The rest will be taxed like income when it’s paid to you.

Remember: depending on the type of annuity you buy, this could affect the amount you can pay into your pensions in the future. Find out more about that here.

 

Take it as flexible income

(Drawdown)

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You can take up to 25% of your savings as tax-free cash before using some, or all, of your remaining pension savings to enter into a flexible income arrangement. This is known as income drawdown. 

This allows you to take the money from your pension savings and re-invest it, taking an income from it when you need to.

Considerations

  • Are you happy making investment decisions in retirement?
  • Will your money last?
  • Do you want to continue contributing to a pension?

How it’s taxed?

Up to 25% of your pension savings can be taken tax-free. The rest will be taxed like income when it’s paid to you.

Remember: this could affect the amount you can pay into your pensions in the future. Find out more about that here.

 

If you’re not sure what to do, now might be the right time to seek some guidance or advice.

Need guidance or advice?

You can find out more about how to find the right guidance and advice

Pension scams are on the rise. Make sure you know what to look out for, and how to protect yourself. 

Ready to take your money?

If you're happy that you've considered all your options and understand what's best for you, you're ready to take the next steps before your retirement.

Get in touch


Or if you’re still unsure, take a look at ‘things to think about’ where you’ll find more information including a handy checklist.