Pension lump sums

Taking money from your pension as and when you need it.

We are authorised and regulated by the Financial Conduct Authority

Pension lump sums

Taking money from your pension as and when you need it.

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We are authorised and regulated by the Financial Conduct Authority

Pension lump sums: explained

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.

Taking pension money early isn’t right for everyone because it could leave you with less to live on in retirement. That’s why it makes sense to talk with an independent and regulated adviser, such as Portafina, first. Important: past performance is not a reliable indicator of future results. Pensions can go down in value as well as up, so you could get back less than you put in.

Be tax-smart with your pension savings

How much pension money you withdraw early can have a big impact on your tax bill and on the size of your future pot.

Let’s take a look at John and Sarah. Both have a £70,000 pension at age 55 and pay the basic rate of tax. They both need £17,500 to cover a financial situation. Sarah takes just her tax-free cash allowance to achieve this. While John decides to take £40,000, putting the balance in his bank account for a rainy day.

¹This is based on an average pension annual return of 6% from 55 to 65 for both Sarah and John. No other charges taken into account. Tax is based on current HMRC regulations and is subject to change.

How to manage your lump sums

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.

Why staying invested matters

Discover why keeping your pension savings invested matters and the impact withdrawing money to put in a bank account could have on your pot.

Get started for free

We can check to see if pension lump sums are right for you. Our initial investigation into your pension is free. And in most cases we can continue to provide full advice with no obligation. At any stage you can choose to walk away, better informed and with nothing to pay.

Get started

How it works in 3 easy steps

With our no obligation pension check discover if pension lump sums are right for you.

Your permission

Complete and return a simple form giving us your permission to check your pension.

Our boffins

Our specialists gather and analyse all the information we need about you and your pension.

Your decision

We’ll send you a report, clearly stating what we think you should do. The choice is then yours.

If you decide to release some of your savings, we can take care of everything. This includes managing your pension for you. We would let you know in writing what the fee would be. Or, you can choose to walk away with nothing to pay.