Take control with flexible access
Flexible access lets you dip into your retirement savings, while the rest stays invested in your plan. This option is also referred to as income drawdown.
Watch how flexible access works
What can I do with flexible access?
- Enjoy the income you need, when you need it
You can take cash withdrawals, set up regular income payments and make changes as often as you need to.
- Take a tax-free lump sum
You can usually take up to a quarter of your retirement savings tax-free*. This can be paid in one lump sum, or spread out over a series of smaller cash payments.
- Give your savings more time to grow
Whatever you leave in your plan will stay invested – meaning it still has potential to grow.
- Change your mind whenever you like
If your needs change, you can use the savings you have left to buy a secure income – this will pay you a guaranteed, regular income for the rest of your life.
*You may be able to take more than this if you successfully applied to HM Revenue & Customs for a greater allowance.
What do I need to watch out for?
- Your savings aren’t guaranteed to last forever
With flexible access, your savings stay invested in your plan. While this means they can continue to grow, it also means they can fall in value. There's a risk your money could run out if your investments perform poorly, if you take too much money out of your plan or if you live longer than expected.
- You’ll need to actively manage your plan
To help make sure your savings last for as long as you need them, you’ll need to regularly review the income you’re taking along with how your investments are performing.
- Saving into other pension plans could be restricted
When you start taking an income from a flexible access plan, the government puts a limit on how much you (and your employer) can save into other money purchase pension arrangements without a tax charge. This is called the Money Purchase Annual Allowance – and it’s currently set at £4,000 a year.
- Your entitlement to state benefits could be affected
The amount of income and/or tax-free cash you take from your retirement savings could affect your entitlement to means-tested state benefits, this includes such things as housing benefits and council tax reductions.
What happens when I die?
If you have money left in your plan when you die, it can be passed on to your loved ones – usually free of inheritance tax.
- If you die before age 75, your retirement savings can be paid to your loved ones how they like, income tax-free.
- If you die aged 75 or older, your retirement savings can be paid to your loved ones how they like, subject to tax.
Remember - you can shop around
When you come to access your retirement savings, you’re free to shop around. That means you don’t need to stay with the pension provider you’ve been saving with – you can take your savings to the market and see who can best meet your needs.
How does this income option compare?
|Your options||Secure income||Flexible access||Take cash|
|Can I arrange to take a regular income?||Yes||Yes||No|
|Is my income guaranteed for the rest of my life?||Yes||No||No|
|Can I change how much money I receive?||No||Yes||Yes|
|Could my money run out later in retirement?||No||Yes||Yes|
|Can I do something different with my savings in later years?||No||Yes||Yes|
|Can I take some tax-free cash?||Usually up to 25% of your pension pot*||Usually up to 25% of your pension pot*||Usually up to 25% of your pension pot*|
|Find out more||
*You may be able to take more than 25% if you have protected tax-free cash. A financial adviser could help you understand whether this applies to you.
Other useful information
- How will my retirement income be taxed?
- What are my tax-free allowances?
- What will the State Pension provide?