C. Take your pension as a lump sum

You can withdraw your entire retirement savings in one go as a cash lump sum. 

25% of lump sum TAX-FREE

75% lump sum

This will be taxable at the basic or higher rate of tax, or a combination of the two, depending on both the amount and your income. For customers living in Scotland, the Scottish rate of tax applies.

Impact of tax

HMRC will add 75% of your cash lump sum to any income you’ve earned during a tax year. How much tax you’ll pay will depend on the total amount. This could mean that some of your money will be charged at a higher rate of tax. We, along with other pension providers, are required by HMRC to deduct emergency income tax. How much will depend on the size of your pension savings. Do bear in mind that you may need to pay more tax if HMRC calculate you’ve not paid enough. Or you could receive a rebate if you’ve paid too much.


Things to remember

Will you have enough to live on if you withdraw all the money from your pension savings?

Once your pension savings have been emptied, there’s no going back

The amount of money that you take from your pension could affect any state benefits that you may be entitled to

If there are any outstanding debts, creditors could have a claim on this money.


Tax warning

Tax treatment will depend on your individual circumstances and may be subject to change in the future.