Pension Options: Find Out What You Can Do With Your Pension
The Pension Rules introduced in April 2015 brought new freedoms and choice on when and how you can use your pension pot. You can now access as much of your savings from a Defined Contribution Pension Scheme provided you are 55 years and above. Not all schemes offer this option and it is imperative you enquire from your pension or an independent financial adviser to see what pension options are available for you. If your pension provider does not offer your preferred option, you can transfer your pension savings to a pension provider who offers that option.
What are My Pension Options at 55?
There are many pension options you can choose when you retire. You may choose to work part time, reduce the hours you work gradually or do something completely different. You also have more freedom on what you can do with your pension, but this will largely depend on the type of pension you have.
The type of pension that gives you a choice when you retire is called Defined Contribution Pension or a Money Purchase pension. If you have a defined benefit pension, you do not get the same choice when you retire. Here are the main options of taking your personal pension at 55:
- Leave your pension savings where they are.
- Take some or all of your pension pot as a cash lump , with 25% tax free.
- Take money directly from the pension pot and leave the rest invested (Pension Income Drawdown). There are no restrictions on the amount of money you can but you need to consider what impact this will have on your income in retirement.
- Buy an annuity; you can take a cash lump sum.
- A mix of these options.