Taking your pension

The information in this guide was last updated on 21/04/2017

Changes to the benefit options for pensions are now available to use in some schemes.

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.

It's 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.

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The State Pension

You should get a letter four months before you reach your 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 changed on 6 April 2016. The new pension applies to:

  • men born on or after 6 April 1951
  • women born on or after 6 April 1953

You can find out more about the New State Pension for people who reach their State Pension Age on or after 6 April 2016 on the gov.uk website, where you can also check your individual State Pension age.

For those who reached State Pension Age on or before 5 April 2016 the maximum basic State Pension is £122.30 a week. Any additional State Pension depends on the National Insurance contributions you made while you were earning. You can see more detail about the State Pension and Additional State Pension on .gov.uk.

For most people the State Pension is not a lot to live on, and may be subject to change under future governments. It’s 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.