Take taxable lump sums

You can use your pension pot to take lump sum payments when you need, to suit your needs and personal circumstances.

It is important that you consider the tax implications of taking lump sums from your pension pot as it could push you into a higher income tax band – see ‘What tax will I pay?’ below.

Use our pension tax calculator to see how much tax you may need to pay.

Please be aware that your existing pension is unlikely to offer this level of flexibility and you might need to transfer to another pension provider or into a different product if you want this option.

 

Taking lump sums from your pension pot
Advantages Disadvantages
You can take control of how you use your pension pot to suit your needs whether you want to retire fully or semi-retire. You can choose how and when you take payments from your pension pot and spread this over whatever time period you want. Unlike a pension annuity which provides a guaranteed income for life, your pension pot may run out. This may be true if you take higher levels of payments in the earlier years or your remaining fund is affected by poor or low investment performance.
You can choose to use your remaining pension pot or any part of your pot to take an income at any time. The amount of income you would receive is not guaranteed. charges may apply when you take an income.
  The rates used in converting your pension pot into an income may change over time. So if you choose to take an income at a later date then the amount of income may be more or less than if you convert all your pension pot into a guaranteed income for life in one go.
  If you want to continue to contribute to a pension and your contributions (including those of your employer and the tax relief you receive) exceed £4,000, you may incur an additional tax charge.

 

Find out more...