Pension options: what can I do with my pot?

You don’t have to start taking money from your pension pot when you reach the age your pension provider has recorded for you to retire. You can leave your money invested in your pot until you need it. 

You can choose to take up to 25% of your pension pot tax-free. You can then use the rest of your pot to buy an insurance product that guarantees you an income for the rest of your life – no matter how long you live. You can also get a guaranteed income for a fixed period.

You can take up to 25% of your pension pot tax-free, and keep the rest of your pot invested to give you an income. You decide how much to take out and when. You can set up a regular income if you choose. How long it lasts will depend on how your investments perform and how much you take out. 

You can take smaller sums of money from your pot until you run out. Your 25% tax-free amount isn’t paid in one lump sum – you get it over time. 25% of each lump sum is tax-free, and the rest is taxed as earnings. 

You can cash in your entire pot – 25% is tax-free, and the rest is taxable. 

You don’t have to choose just one of these options, you can choose to mix different options. This can give you flexibility to suit different needs at different times during your retirement.

For example, you could use one option at the beginning of your retirement – such as adjustable income. And you can use another option later – such as an annuity to get a guaranteed income.

If you have a large pot, you might be able to split it to provide some guaranteed income and leave some invested.

If you have more than one pension pot, you could choose different options for each pot.

You can also keep saving into a pension if you want, and get tax relief up to age 75.

Some providers offer products that mix two or more options.