Taking Your Pension

How do you take money from your pension?

You may draw any pension benefits directly from your account, with access to all of the retirement options that are allowed under current legislation; giving you the greatest flexibility and ongoing personal control over your pension.

You can also transfer other pensions into your SIPP in order to gather them together and draw benefits from your funds as a whole. Alternatively, you can transfer your fund from this SIPP to a pension arrrangement with another provider, if you believe that would be more suitable.

If you are thinking about taking your pension benefits, please contact us in the first instance so that we can run through your options and let you have the correct claim forms.

When can you start to take your pension?

Currently, you may start to take your benefits at any time from age 55.

However, the Government has now confirmed plans to increase the minimum pension age to 57 from 2028, to coincide with the planned increase in the State Pension age, to 67. From then on, the minimum pension age will remain ten years below the State Pension age.

Bear in mind that if you choose to take your pension earlier than first anticipated, the benefits may be lower than expected, as fewer contributions will have been paid and the funds will not have been invested for the length of time first assumed.

What benefits can be taken?

In most cases, you may take up to 25% of your fund as a tax-free lump sum payment, with the balance of the fund being used to provide income. All income payments are liable to tax at your highest marginal rate, although they are not liable to National Insurance.

You have a wide range of options when choosing how to structure the income payments from your pension; and we recommend that you take suitable advice before proceeding. You can also find more information on the Government’s Moneyhelper website.

You do have the option of drawing a tax-free lump sum and leaving the balance of the fund invested, without taking any income. This gives you the potential for ongoing growth and a larger income in the future.Moneyhelper website

Do you need to stop work in order to draw your pension?

No, you can take money from your pension and continue to work.

Can you still pay contributions, once you have taken your benefits?

Yes, you can still pay into a pension, although you should take care when deciding what income to draw if you do wish to continue making contributions.

If you receive any income under a flexible arrangement (such as flexible drawdown), you will trigger the Money Purchase Annual Allowance (MPAA). This limits your ongoing allowable contributions to £10,000 pa. However, if you receive a guaranteed income from an annuity or a final salary pension, the MPAA is not triggered and you retain the normal £60,000 annual allowance.

If you draw a tax-free lump sum and leave the balance invested without drawing any income, this will not trigger the MPAA and you will retain the full annual allowance.

You will not receive tax-relief on any personal contributions that are paid after the age of 75.