Interactive Investor

Pension options at retirement

We offer a range of flexible options for accessing your pension. There are no hidden costs – it’s all included in your SIPP fee.

Which? Recommended SIPP

Please remember, SIPPs are aimed at people happy to make their own investment decisions. Investment value can go up or down and you could get back less than you invest. You can normally only access the money from age 55 (57 from 2028). We recommend seeking advice from a suitably qualified financial advisor before making any decisions. Pension and tax rules depend on your circumstances and may change in future. 

Pension options: what you need to know

Deciding how to use your pension to meet your income requirements is not always easy. If you have any questions, we recommend speaking with Pension Wise (a service from MoneyHelper), or an independent financial adviser.

You might find that combining several pensions into a SIPP makes retirement planning simpler. You should take advice on this.

Some options are irreversible, so make sure you are certain before you go ahead.  

Withdrawing money from your SIPP

You can withdraw money from your pension once you reach 55 (57 from 2028) - although you don't have to. 

We offer a range of flexible options for accessing your cash:

Take a tax-free lump sum

You can take up to 25% of your pension tax-free, subject to a maximum of £268,275 unless you have protection in place, even if you don't plan to take the rest until later.

Income drawdown

Take a tax-free lump sum of up to 25%, subject to a maximum of £268,275, and set up regular or one-off payments for the rest.

Lump sums (UFPLS)

Take your pension in lump sums, as and when you need them.

The first 25% of each lump sum is tax-free, subject to a maximum of £268,275, and the rest is taxed as income.

The funds you don't withdraw are left invested.

Annuity (with another provider)

Get a guaranteed income in return for some or all of your pension pot.

Annuities offer security, but are not as flexible as other options. Depending on your circumstances you may get less back overall.

A combination of the above

Some people choose to take more than one option. For example, you could take a small annuity and the rest of your pension as drawdown. This might give you a good balance of security and flexibility.

Leave your pot untouched

You may be able to delay retirement and leave your pension pot untouched - for example, if you have other sources of income. When you die, any remaining pension can be passed on to your beneficiaries - tax-free if you die before the age of 75.

Leaving your pension untouched can also give it more time to grow, although it could also shrink if your investments underperform.

How can Pension Wise help?

If you have a defined contribution pension scheme and are 50 or over, then you can access free, impartial guidance on your pension options by booking a face to face or telephone appointment with Pension Wise, a service from MoneyHelper

If you are under 50, you can still access free, impartial help and information about your pensions from MoneyHelper


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