Before you retire

Taking your pension

Taking your pension

The information in this guide was last updated on 21/12/2015

The new flexible benefit options for pensions, which were announced in 2014, will be available to use in some schemes from 6 April 2015.

You can still take a quarter of your pension pot tax-free  also known as Pension Commencement Lump Sum (PCLS). The remainder is taxable, as income, when you draw it out.

Your pension fund can be used to purchase an annuity, or be taken out all at once, or in stages with some remaining invested. Whichever option you choose, all withdrawals and income, over and above your PCLS, are taxable.

Check with your current pension provider about what options they will offer, and for features and options in your existing arrangements.

Its vital to take the time to understand your options and work out what is right for you and for loved ones who may depend on you. You can get more information on your options from a new guidance service set up by the government called Pension Wise

The State Pension and State Second Pension

You should get a letter four months before you reach the State Pension age, telling you how to claim your pension. If you don't get a letter, you can claim online or over the phone. 

The State Pension is changing to a single tier rate, if you are due to reach State Pension Age after 6 April 2016.

For those retiring on or before 5 April 2016, there are usually two parts to your State Pension - basic and additional. In 2015, the most an individual can get on the basic State Pension is £115.95 a week. Your additional State Pension depends on the National Insurance contributions you made while you were earning. 

For most people the State Pension is not a lot to live on, and may be subject to change under future governments. Its best to make your own pension provision, rather than rely solely on the State Pension.

Reviewing your will

Your finances change at retirement, so you should review your will –or make one if you haven’t already done so. See our guide to estate planning.

Life after work