Leaving your pension invested

Retirement means different things to different people. Some may choose to stop working completely, but others may decide to reduce their hours, take on occasional projects or move into a new career in an area that they find interesting. Our Global Retirement Survey shows that almost 2 out of 5 people over the age of 55 plan to work at least part-time after they start withdrawing from their retirement savings¹.

This is why we think that approaching retirement shouldn’t be seen as a deadline. You can take the time to make a decision – and then be sure that you’re using your money in the way that’s right for you.

• It could give your savings more time to grow: Thanks to the effects of compounding, even a few extra years could mean significantly more money in your pension account – though, of course, it’s important to remember this is not guaranteed and investments can fall in value as well as rise.
• It means you won’t need the money for as long: If you can hold off using your money for a few years, you could then potentially take out more every year without worrying about it running out or buy an annuity at a later age that pays a higher income.
• You can pass your pension on: You can nominate a beneficiary by completing an expression of wish form, so your pension can be paid to your loved ones should the worst happen. There are potentially valuable tax benefits involved, should you die, in leaving your pension savings to your beneficiaries. This is because money in your pension will normally be deemed to be outside of your estate for Inheritance Tax purposes (although this is due to change on 6 April 2027). However, you should be aware of the following: 

You’re free to choose any fund(s) from your scheme’s fund range if you leave it invested, but it is a good idea to make sure you’re invested appropriately. After all, investments do involve risk and you want to make sure your money is in funds that reflect your savings goals, time horizon and investment risk-return appetite.

One option if you have a Pension Drawdown Account after withdrawing some tax-free cash, is to consider an Investment Pathway. These are designed to offer you simple, good-value investments that broadly match four retirement income goals. 

We have lots of information and guidance on our website, but if you would like more personal support, you could consider regulated financial advice. You can find an adviser through the MoneyHelper directory or unbiased.co.uk. You can also contact our Workplace Investing Service Centre on 0800 3 68 68 68 to discuss what options might be available to you in your plan. Don’t forget, converting your pension savings into a retirement income could be one of the biggest financial decisions you ever make, so it’s really important you understand the options available to you and how they could affect your income in the future.

Investment Pathways

You may consider following our Investment Pathways, which are designed to ensure that you have access to simple, good-value investments that broadly match their retirement income goals once you have taken your tax-free cash and have a Pension Drawdown Account. These funds are not available across all our schemes, so you need to check your scheme’s fund range.