- If you withdraw any money from your pension over the amount you can take tax-free, it will affect the amount you can carrying on saving in pension plans with the benefit of tax relief. This will go down from £60,000 to £10,000 and is known as the money purchase annual allowance.
- If your pension pot is worth less than £10,000, you may be able to withdraw the whole amount as a single lump sum, including 25% tax-free. This is known as a ‘small pot’ withdrawal, and it will not count towards your money purchase annual allowance or your lifetime allowance.
Choosing income options
You have more choice and flexibility in how you set up your retirement income than ever before. So there are more things to consider – tax rules, legislation, the decisions you make now, all of these will affect the options available to you in the future.
If you’re planning to retire in the next few years, you may want to start thinking about what you’re going to do with the pension pot you’ve built up. There’s a great deal of flexibility about how you take an income from your savings. That means it’s a good idea to check out the pros and cons of the various options, and see how they will each affect your lifestyle, the tax you pay and the amount you can pass on to your family.
Some points to bear in mind
Calculate tax on withdrawals
Understand how much tax you might have to pay on the money you take from your pension and how it could affect your future retirement income.
Flexible income calculator
This tool helps you understand how much flexible retirement income (income drawdown) you could take and how long your pension might last if you do so.
Need some help?
Workplace Investing Service Centre
If you’re unsure about any of your retirement income options and would like to find out more about your Fidelity pension, call our Workplace Investing Service Centre.
The government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. Guidance is available at pensionwise.gov.uk or over the phone.