How much can I take from my Pension Tax-free?

When can I take my Pension?

You can start taking your personal/work pension from the age that is set by your pension scheme. This will usually range between the ages of 60 and 65.

It is possible to take your pension earlier, from age 55, with some pension providers. In order to determine when you can take your pension, it is worthwhile checking with your pension provider.

State retirement pensions can be have changed significantly since April 2010, in that the age that you may start to receive your state pension is currently 68 years for both men and women and will depend upon when you were born. This is likely to change again in the future and it is worth keeping an eye on legislation in this regard.

How much can I take from my pension tax-free?

It is possible to take a lump sum payment from your pension pot tax-free. This is usually 25% of the overall pension pot.

You will be taxed on the remaining pension pot for anything received over your personal tax allowance for the year and this will vary depending upon your total income from all sources for the tax year.

What sort of pension have I got?

A pension is a pot of money that you save into for the purposes of you receiving an income from that pension pot after your retirement from employment.

The best way to ascertain what type of pension scheme you have is to contact your pension provider. They will be able to advise you: –

  • What benefits your pension scheme provides to you;
  • The earliest age that you may start to receive your pension;
  • Whether a lump sum payment can be taken from your pension pot;
  • Which type of pension you belong to and your obligations under the pension scheme.

It is quite possible that you will have several pension pots available to you, i.e. personal pension arrangements and/or work pensions. You will need to look at each pension pot and identify the different pension schemes for each.

What is a SIPP?

A SIPP is a self-invested personal pension. This is a scheme where you get to choose for yourself where you invest your money from a larger selection of investors.

With many pension providers, you do not get that choice. They simply invest according to the pension providers set list of investors which can be limited. You do not have the flexibility to choose where your funds are invested.

The greater choice of investment under a SIPP can make a huge difference to your pension fund overall, especially if your investments perform greatly as this will impact your pension pot size greatly upon retirement.

A SIPP is similar to other personal pensions you may have, but you have the option to pay in more money to your pension pot as and when you need or want to. Your money will continue to grow in that pension pot subject to the usual tax rules and based upon your financial circumstances. In addition, the Government adds 20% tax relief for a basic-rate tax payer.

It is possible to take your SIPP from the age of 55, even if you continue to work and it is possible to take 25% of the pot tax-free with the rest taxed as per your personal income allowance per year.

Is my Pension right for me?

If you are worried your pension is not right for you, or you are concerned you were not given full options when discussing your pension requirements, then it is worth you getting the advice you received about your pension checked out.

We would be very happy to assist you with this, all on our “no win, no fee” basis.

In the event we are successful, our fees are 20% plus VAT (equivalent to 24%).