Can I cash in my pension | Withdrawing pension

Can I cash in my pension? Acumen explains all

The simple answer is yes! Since April, retirees have enjoyed more choice and flexibility than ever before when it comes to withdrawing money from their pension. There are several different options available, explained in this blog, which would be best explored with financial experts, like Acumen, to ensure you make the best possible choice.

The pension reforms mean that if you have reached the minimum pension age of 55 (or earlier if you are in ill health or have a protected retirement age) you can decide how to make your defined contribution pension work for you.

Whether you plan to retire fully, to cut back your hours gradually or to carry on working for longer, you can now tailor when and how you use your pension – and when you stop saving into it – to fit with your particular retirement journey,

according to the Money Advice Service.

There are myriad options available and, with such a broad range of permutations, it is essential to seek out independent financial advice to ensure you opt for the most tax-efficient and beneficial arrangement to suit your needs.

So what are your options?

You can mix and match any of the following options:

  • Buy an annuity: You can withdraw up to 25% of your pot as a one-off tax-free lump sum, then convert the rest into a taxable income for life – known as an annuity. Different annuity options and features determine how much income you would receive.
  • Flexi-access drawdown: You might opt to drawdown your tax-free lump sum and re-invest the remainder to give you a regular taxable income. Unlike an annuity, however, your income isn’t guaranteed for life. So your investments require careful management.
  • Small cash sums: With this option you can take cash as required and leave the rest to grow tax-free. For each withdrawal the first quarter is tax-free and the rest is taxable income. There may be charges each time you make a withdrawal and limits on how many you can make each year.
  • Whole pot as cash: Once again, the first 25% will be tax-free but the rest will be taxed at your highest tax rate. It won’t provide a regular income for you or your dependents and there is a very real risk that you could run out of savings in retirement. Always seek financial advice before cashing in your whole pension pot.

Once again, our advice would be to always seek out professional advice, whatever your circumstances, to make sure that you maximise your hard-earned savings and ultimately enjoy your retirement with absolute peace of mind.

To discuss your pension plans with one of our dedicated team please contact us today on 0151 520 4353 or email

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