You should speak to your financial adviser before making any decision about what to do with your retirement savings.
Things to consider
Before deciding whether to take a full or partial withdrawal from your plan, there are some important things you need to think about. We’d recommend you discuss these with your financial adviser to make sure you get the best possible outcome for your own individual circumstances.
Taking lump sums from your retirement savings might sound like an attractive proposition – but once you’ve spent it, it’s gone.
You need to think carefully about whether you need your retirement savings to last you for the rest of your life or if you have another income you can rely on.
Taking lump sums from your retirement savings could affect your entitlement to certain State benefits.
For example, means-tested benefits are paid according to whether your total income and savings fall within certain limits. These benefits include such things like pension credit, housing benefit (for rental costs) and council tax support.
If you think you might be eligible for these benefits, you need to think about how the way you take your retirement savings will affect your entitlement.
You can find out more about means-tested benefits at www.gov.uk.
Inheritance tax may be payable on your savings and other assets when you die. Any retirement savings you’ve put into savings would form part of your estate. Tax may be payable on your death if the value of your assets exceeds £325,000.
It can be difficult to decide whether inheritance tax is payable on pension benefits. You can find more information by visiting the Government website or by getting in touch with the Probate and Inheritance Tax Helpline on 0300 123 1072. They’ll be able to help you understand any potential inheritance tax liability.
You can use our quick pension calculator to see how much income and tax-free cash you might expect when you retire.
The Government set allowances on how much you can contribute towards your retirement each year.
As soon as you take a full or partial withdrawal from your plan, the maximum you can pay into any other pension plans may be reduced to the money purchase annual allowance, which is currently set at £10,000 a year.