Take a tax-free lump sum from your SIPP
You can take a tax-free lump sum from your pension online.
- Taking a tax-free lump sum involves moving some or all of your SIPP into a drawdown pot. Up to 25% of this amount can be taken tax-free (up to a maximum of £268,275 unless you have a lifetime allowance protection). The remaining 75% can be taken as a taxable income when you need it.
- The process should take around 30 minutes. It usually takes no more than 10 working days after this to receive your lump sum.
From the 'SIPP' menu in your online account, select 'Withdrawing money'.
If you haven't done so already, you will need to add a bank account before you can continue.
Then select 'Set up or amend withdrawals'.
You will then see a page with information about taking guidance from Pension Wise before withdrawing from your pension. From here you can either choose to book an appointment with Pension Wise, let us know that you’ve already had an appointment or confirm that you wish to proceed without having an appointment.
You will then see a summary of your available pension funds. Scroll to the bottom of the page and select ‘Next’.
Here, select your uncrystallised fund (this simply means funds you haven't moved into drawdown yet).
Take time to read the six documents under ‘Taking your pension benefits’.
Doing this will allow you to proceed to the next step.
Tick to confirm you have read the documents, and select ‘Move funds into Drawdown - Crystallise funds, take a tax-free lump sum and the option to set up taxable income payments’.
Before taking a tax-free lump sum, you must move some or all of your pension into a drawdown pot (also known as 'crystallised fund').
Here, you can choose the amount you want to crystallise (move into drawdown), or select ‘full fund amount’.
Next, enter how much of your drawdown pot (your crystallised fund) you would like to take as a tax-free lump sum (up to 25%).
If you are taking a tax-free lump sum and no regular income, you can select this here.
You also have the option to take a one-off taxable amount.
Now select ‘Continue’.
Here you will be asked how you want to invest your SIPP fund in future.
If you don't want to choose your own investment strategy, you can use an investment pathway.
These are investment funds selected by our experts to match four common goals that people have when moving funds into drawdown.
On this screen, confirm whether you have any form of Lifetime Allowance protection.
If you have any LTA protection, we will need a copy of any protection certificates before we can set up your benefits.
- Please send us a secure message from your online account and attach the document(s).
- Or you can post the documents to: Pensions Team, interactive investor, 2nd floor, One Embankment, Neville Street, Leeds, LS1 4DW.
We will then ask you to review your illustration of benefits.
Click 'view key feature illustration' to see a breakdown of your drawdown arrangements.
You will then be asked to complete a pension benefits questionnaire. Your answers will flag the important risks you should consider before taking benefits.
Check your benefit request summary and make sure it is accurate.
Once you have read through the declaration, click ‘Submit this benefit request’.
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.