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What you can do with your pension pot

There are 6 ways you can take your defined contribution pension pot.

You can usually take 25% of your pot tax free.

Leave your whole pot untouched

You don’t have to start taking money from your pension pot when you reach your ‘selected retirement age’.

You can leave your money invested in your pot until you need it.

Guaranteed income (annuity)

You use your pot to buy an insurance policy that guarantees you an income for the rest of your life – no matter how long you live.

Adjustable income – Flexi Access Drawdown

Your pot is invested to give you a regular income. You decide how much to take out and when, and how long you want it to last.

Read more on pension drawdown explained.

Take cash in chunks

You can take smaller sums of money from your pot until you run out. Your 25% tax-free amount isn’t paid in one lump sum – you get it over time.

Take your whole pot in one go

You can cash in your entire pot – 25% is tax free, the rest is taxable.

Mix your options

You can mix different options. Usually, you would need a bigger pot to do this.

How long will me pension need to last?

Please click here to access the Office of National Statistics to calculate the average Life Expectancy.

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    Why take Drawdown advice?

    The Financial Conduct Authority (FCA) produced a report called the Retirement Outcomes Review (MS16/1.3) in June 2018 which commented on how benefits were being taken since the Pension Freedom and Choice legislation was introduced in April 2015.

    Final Salary Pension Schemes

    This will effect you if you have a deferred Final Salary Pension plan or Defined Benefit Pension. If you are a deferred member, i.e., you have left your employer but the pension is not due for payment until your normal retirement date (65?), your right to a Cash Equivalent Transfer Value (CETV) may be affected.

    Budget 2014 – The key changes for annuities

    Using a Fixed Term Annuity or Drawdown will allow you to access 25% of your fund as a tax free lump sum and leaves the remainder of your benefits to be accessed under the further changes proposed from 2015. Therefore, in the interim, this leaves the door open for your options.