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Options at Retirement

Withdrawing all your money immediately 

As long as you have not already taken your benefits, it is possible to take your funds as a one payment. Usually 25% will be tax free with the balance being subject to income tax at your own marginal rate.

Small lump sum is where you take all your pension benefits as a lump sum as long as your pension fund value is less than £10,000 and you are over the age of 55. You can only take three small lump sum payments. You will need to check with your pension provider(s) to find out how many separate arrangements you have. 25% of the lump sum will be payable tax free and the balance taxed at basic rate tax of 20% when the payment is made. The taxable balance is liable to income tax at your own marginal rate so if the correct amount of tax has not been deducted, HMRC will need to be contacted to reclaim or pay any additional tax.

Uncrystallised Funds Pension Lump Sum is where you leave money in your pension pot and it remains invested in funds of your choice and you take a one off payment or series of payments, until your money runs out or you choose another option. Usually 25% of each amount taken will be treated as a tax free lump sum with the balance being subject to income tax at your own marginal rate.

What to consider?
If you are thinking about taking a lump sum, you will need to consider the tax implications; a choice that’s right for some people could lead to a large and unexpected tax bill for others.

The higher the lump sum, the less remains to provide you with an income during retirement. Once your pension fund has been exhausted, no further benefits are payable.

If you receive any means tested benefits, you will increase your income with the pension money you take out, which may affect the benefits you receive.

If you choose to take this option you may wish to seek guidance or professional advice to ensure that you are aware of all the potential implications. More information on guidance and advice.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.