A pension is a long-term investment. Its value can go down as well as up and could be worth less than was paid in. Laws and tax rules may change in the future. Your own circumstances and where you live in the UK will also have an impact on tax treatment.

Taking money from your pension plan

You can normally take money from your pension plan when you reach 55 (subject to change). Before you take money from your pension plan, it’s important to ask yourself if you really need it right away.

When and how you take your money can make a big difference to how much tax you might pay and how long your money will last. But don’t worry, we can support you and guide you through all your retirement options.

Ways to take your pension money

We offer different ways you can take money from your pension plan. We’ve broken them down here to help you make a decision that’s right for you. Keep in mind that you can choose one option or a combination of options. Read below to get more information.

Flexible
Take a flexible income
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Take cash lump sums from your pension plan
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Buy a guaranteed income for life (an annuity)

This is where you can take a regular income from your pension plan that you can change at any time. Any money left in your plan will be invested so it has the potential to grow but, like all investments, it can still go down in value.

How much you take out of your plan and the performance of your investments will affect how long your money may last so you need to review your investments on a regular basis and manage your withdrawals to make sure your money lasts as long as you want it to.

You can also pass on any money left in your pension plan when you die.

This is where you can take cash lump sums from your pension plan whenever you like. You can also take all of your money in one cash lump sum but you need to think about the amount of tax you may have to pay if you take out large cash lumps sums.

Any money left in your pension plan will be invested so it has the potential to grow but, like all investments, it can still go down in value.

How much you take out of your pension plan and the performance of your investments will affect how long your money may last so you need to review your investments on a regular basis and manage your withdrawals to make sure your money lasts as long as you want it to.

You can also pass on any money left in your pension plan when you die.

You can use your pension money to buy a guaranteed regular income for life, sometimes called an annuity.

If you choose to buy an annuity you can’t change it once it has started and it will last the rest of your life so you don’t need to worry about it running out.

You usually can’t pass on your guaranteed income when you die but you may be able to add additional benefits for your spouse if you die. This will usually reduce the amount of income you can get.

What are your options?

Choose an option to get started

Remember: Any money left in your pension plan will stay invested, so the value of your plan can go down as well as up. The money in your plan can run out if its value goes down.

25% of your pension savings are usually tax-free

When you reach 55 (subject to change) you can usually take 25% of your total pension savings tax-free. It’s important to think about whether this is right for you or if you’d prefer to keep your money invested. Keeping it invested gives your money the potential to grow further.

You can take this 25% as one lump sum, a number of smaller lump sums or as regular payments. Withdrawals from the rest of your pension plan will be subject to tax.

Comparing retirement options

Here’s a quick comparison of how the features of each retirement option compare.

Option Will you get a guaranteed income for life? Does your remaining money stay invested? Can you access your money at any time? Can you pass on what’s left after you die?
Take a flexible income                     No Yes Yes Yes
Take one or more lump sums No Yes Yes Yes
Buy a guaranteed income for life (annuity) Yes No No No*
Leave your pension invested for now No Yes Yes Yes

*Usually you can't pass on your guaranteed income for life, but you could add on options. For example, you could choose to pay a spouse's pension after you die. For more information, please visit our Guaranteed Income for Life page.

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Not sure which option is right for you?

Don’t worry: we have some handy tools that can help. They’re quick and easy to use, and can help you make a more informed decision that’s right for you.

Retirement options

Our Retirement Pathfinder tool can help you understand how you can take your pension money in a way that suits you.

See your options

Retirement calculator

Our Retirement Calculator can help you explore your options based on your pension’s value.

Try the calculator

Not ready to take money from your pension plan?

You can always leave your money invested. But it’s important to keep an eye on how your investments are doing and how they're affecting the value of your pension fund.

Log in to see your pension's value

Other ways to fund your retirement

Taking money from your pension plan is one of the most tax efficient ways to fund your retirement, but there are other options if you think this won't be enough or if you want to pass on your money when you die.

For example: you could consider downsizing your home to release cash or reduce your outgoings or you could consider working part-time to keep money coming in.

If you're a homeowner aged 55 or over, Standard Life’s Equity Release provided by Age Partnership may allow you to unlock tax-free cash from your home. Find out how equity release works here.

Remember: Equity release may involve a lifetime mortgage which is secured against your property or a home reversion plan. To understand the features and risks, ask for your personalised illustration. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.

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More about retirement

We have lots of useful information that can help you prepare for retirement, and the steps you can take when you feel ready to retire.