Withdrawing money from your pension
There’s a lot to think about when you withdraw money from a pension, but we’re on hand to guide you through the process.
What you need to think about first
Taking money out of a pension is a major decision. So, before you request your withdrawal, there are a number of areas that you need to think about carefully. If you are unsure what the right choice is for you, or what the relevant tax implications might be, we recommend that you speak to an independent financial adviser.
It may help if you take a look at our
tools and calculators, and ask yourself the following questions:
- Have you considered all of your retirement income options?
We will send you information about the options that are available to you six months before your retirement age. It is usually possible to take a quarter (25%) of your pension pot as tax-free cash. You then have the option of setting up a guaranteed income for life (an annuity) with the rest, or you can withdraw your money as one or more lump sums, or take a flexible or regular income. Not all pension plans offer all these options.
You also don’t need to take all your tax free cash in one go if you don’t need all of it right now, and you can also take out lump sums made up of both tax-free and taxable cash. These are technically known as ‘Uncrystallised funds pensions lump sums’.
You should get impartial information on retirement income options from the free Pension Wise service - either visit the Pension Wise website or call them on 0800 011 3797.
- How much are you going to withdraw and will this leave you with enough money to live on for the rest of your life?
A guaranteed income (an annuity) will last for as long as you live, but if you withdraw lump sums from your pension or take a flexible or regular income, there is no guarantee that the money in your pension will last as long as you need it to. Our flexible income calculator will help you see how long your money might last, or if you’re looking for a guaranteed income, our quotation portal will let you know how much income you might receive.
When planning a withdrawal, you should think carefully about how much you need to live on in later years. You may want to explore our retirement budget calculator, which will help you work out how much you may need.
- How will you invest the money that is left in your pension?
Unless you withdraw all the money in your pension in one go, you will have some left in the account, and you need to decide how you would like to invest it. You will have the same range of funds to choose from as before your withdrawal. If you decide just to take tax-free cash, you will have a Pension Drawdown Account, which may also give access to four Investment Pathways, each of which is based on a different retirement income objective.
- Have you thought about taking personalised advice on what is the right option for you?
If you don’t know what to do, consider getting advice that is tailored to your particular circumstances. We can give you information about your options but we cannot tell you what you should do. If you need that sort of help, you can use the Money Advice Service Retirement Adviser Directory or visit unbiased.co.uk to find the right adviser for you.
Requesting your withdrawal
Once you have decided to make a withdrawal, you should call us on 0800 3 68 68 73 between 8am and 6pm on a UK business day. A member of our retirement team will guide you through the process over the phone. Please allow up to an hour for the initial phone call as there is a lot we need to cover. We appreciate that this may seem a long time, but we find that plan members tend to prefer doing it this way than completing a long, complicated form. Please see this guide for more information on the process.
You may need to make an active decision about how you would like to invest any money that is left in your pension after your withdrawal. You will be able to choose from all the funds you currently have access to and you may also have access to our four Investment Pathways. These are simple, good-value options designed around a range of retirement income goals.
Once we have all the details of the withdrawal you are planning, we will send you details confirming everything we have discussed on the phone. The letter will contain a pension withdrawal declaration which you will need to read and sign to confirm that you want to go ahead with the withdrawal.
How long will your withdrawal take?
We will start working on your withdrawal as soon as we receive your signed declaration. If you are withdrawing a lump sum, it should take around seven working days for the money to arrive in your bank account. We usually need 18 working days to set up regular income payments. This means that if we receive your form less than 18 working days before a scheduled payment date, you may receive your first payment the following month. We will write to you confirming when your first payment will be.