Taking 25% out of your pension pot may seem attractive

Since Pension Freedoms were introduced in April 2015, people are now able to access their pension funds more flexibly and can take up to 25% of their pension as a tax-free lump sum, at age 55 or above. Pension drawdown, also known as income drawdown allows you to access a quarter of your private pension funds, without paying any tax, and also enables you to keep the remaining balance of the pension funds invested, ensuring it still has the potential to grow – unlike if you were to purchase an annuity.

How to drawdown your pension

Pension Works are experts on pension drawdown – allowing us to fully advise you on your options for income drawdown and the best way to access your pension. We can assess your current pensions and circumstances to find out whether pension drawdown is the right move for you, in line with your retirement objectives. Simply call us on 0808 164 2664 or click here.

What can I use the money for?

If you’re considering taking a 25% tax-free lump sum you could use it for:

  • Paying off your mortgage or debts – to ensure you’re debt free in retirement
  • Investing the funds in a holiday home, whether that’s in the UK or abroad
  • Purchasing a newer – possibly more reliable car
  • Taking a cruise around the world
  • Ticking other things off your bucket list

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 throughout your retirement. It’s estimated that a £100,000 pension pot would deliver £5000 per annum in retirement income*, coupled with a full state pension – that could mean an annual income of just £13,368.

Carrying out a Pension HealthCheck would give you all the options on releasing funds from your pension and help find you a more suitable pension for your retirement plans.