From 55, with the right kind of pension, you can take money from it as and when you want. If you take this approach, rather than drawing a regular income, it is called taking lump sums. And the first 25% you take it tax free, either as one lump sum or as several smaller amounts.

As you can see from the example of John and Sarah, taking pension lump sums can affect your current and future finances. And if John decided to take more lump sums between 55 and 65 his tax bill could be much higher, his pension a lot smaller and the interest he receives from his bank account minimal. The bottom line is: the more you can keep in your pot, the more money you should have for retirement.

That’s why it makes sense to have a chat with an independent and regulated financial adviser before making any final decisions about your pension.