When can I withdraw my pension?

19 Mar 2024

As retirement nears, you may wonder about accessing your private pension funds. Let’s explore key points to know when you're thinking about diving into your pension savings.

Considerations for Withdrawing Your Pension

Before you tap into your pension, consider your age, health, the type of pension you have, and how you want to access your savings. Typically, you can start withdrawing from most private pensions at age 55, which will rise to 57 starting in 2028.

Ways to Access Your Pension

Once you reach the eligible age, there are several ways to access your pension:

  1. Withdraw the entire pot: Take out all your pension savings in one go.

  2. Smaller lump sums: Draw smaller amounts as needed.

  3. Flexible drawdown: Withdraw variably, depending on your needs over time.

  4. Annuity: Purchase an annuity for a consistent income.

Remember, the first 25% is tax-free, while the remaining 75% is taxable based on your individual circumstances.

If You're Not Ready to Withdraw

If you don't need the funds immediately, you can leave your pension invested or continue contributing to it, with certain limitations if you're already making withdrawals.

Seeking Guidance

Consulting a financial adviser or using resources like Money Helper—a part of the Money and Pensions Service—can provide clarity on tax implications and the effects on state benefits. This support can be accessed from age 50 onwards, offering face-to-face or phone advice.

Withdrawing Early

Withdrawing before retirement age is permissible but could be expensive, potentially incurring up to a 55% tax rate. Managing your withdrawals efficiently can reduce unnecessary tax burdens and ensure your pension lasts through your retirement.

Regular Reviews are Key

Keep an eye on your investments and the totals in your pot. Market fluctuations can affect your savings. Planning your withdrawals wisely and revisiting your financial strategies can help ensure you have enough funds for later life.

State Pension Basics

Separate from private pensions, the State Pension age, which is currently 66, sets the earliest age you can start receiving State Pension benefits. This age is slated to rise to 68 by 2046. Eligibility for the full new State Pension requires 35 qualifying years of National Insurance contributions.

Use the government’s State Pension age calculator to verify your own State Pension age.

Let's Wrap

Understanding when and how you can withdraw from your pension is crucial for making informed decisions about your retirement finances. Whether it’s private pensions or State Pensions, planning ahead and seeking professional advice can pave the way for a secure and enjoyable retirement. Equally, having a good understanding of how much you have is valuable, and the Penny mobile app can bring your pension savings together to make this simpler!

SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.
SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.
SOME IMPORTANT THINGS YOU SHOULD KNOW
Pensions are long terms investments. It’s important that you know the value of your investment could go up as well as down. You could get back less than you put in. Past performance is not necessarily a guide to the future and pension investing is not intended to be a short-term option. Penny does not provide financial advice so please be sure that this investment is right for you.

Your current pension might have special benefits that will be lost if you transfer to Penny. These special benefits include: Guaranteed Annuity Rate (GAR), Guaranteed Bonus Rate (GBR), Guaranteed Minimum Pension (GMP) and Protected Tax Free Cash (PFTC) over 25%. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

Your current provider might charge you a transfer-fee to transfer your pension to Penny. If this is the case, we will not transfer your pension, as you may be better off not transferring in these cases.

You should consider the charges and benefits before transferring your old pensions to your new plan, and consider whether the risk and reward profile of the investments offered matches your needs. It may be that your current provider has lower fees than Penny - where this is the case, we recommend that you carefully consider whether to transfer your pension to Penny, as you may be better off not transferring in these cases.

If you are in any doubt about proceeding you should contact a financial adviser.
© Copyright 2024 Penny Technology Limited. Company registration: 11999643. FCA Reference Number: 931299.