Since Pension Freedoms were introduced in April 2015, people are now able to access their pension funds more freely and can take up to a 25% tax-free lump sum out of their pension pot when they reach 55 years or older and retire.
Did you know?
The average pension pot for people 55 years or older is £105,496*
Based on the average pension pot size, that could mean up to a £26,000 tax-free lump sum you can take to enjoy when you retire.
If you’re considering taking a 25% tax-free lump sum you could use it for:
- Paying off your mortgage or debt’s to ensure your debt free in retirement
- Investing the funds in a holiday home, whether that’s in the UK or abroad
- Purchasing that classic car you’ve always wanted like a Jaguar MK1
- Take a round the world cruise with P&O Cunard
- While taking a 25% tax-free lump sum might seem attractive now, you will need to consider the impact this may have on your retirement and whether your funds will last. It’s estimated that a £100,000 pension pot would deliver £5000 per annum in retirement income*, coupled with a full state pension could mean an annual income of just £13,368.
Carrying out a Pension HealthCheck could give you all the options on releasing funds from your pension and find you a more suitable pension for your retirement plans.