Your pension income options
If you don't need any money from your pension you can leave it all invested as it is. Alternatively, if you do want to access your pension pot then there are a number of ways you can do this.
Important information - investment values (and income from investments) can go down as well as up, so you may get back less than you invest. SIPP eligibility and tax treatment depends on individual circumstances and tax rules may change. You cannot normally access money in a pension until age 55 (57 from 2028). Before transferring a pension, compare all the benefits, charges and features and always seek financial advice if you’re unsure.
Work out what you have
There are lots of different places where you might get an income for your retirement. You’ll need to know what they are and how much you have so you can plan ahead effectively. Here are some points to consider:
- You can leave your money in your pension pot and take an income from it.
- You can take 25% of your pot tax-free, as long as this amount is not higher than your remaining lump sum allowance.
- Take withdrawals whenever you like, but income after the first 25% will be taxed as earnings.
- The rest of your money stays invested.
- You can choose how much to take and how often.
- If you take too much, or your investments underperform, you may not have enough left to live on in retirement.
- You can leave any funds you don’t withdraw to your family, beneficiaries or charities. If you die after you’re 75, your beneficiaries may have to pay income tax on the money.
- You can leave your money in your pension pot and take lump sums from it as and when you need.
- 25% of each lump sum will be tax free, 75% will be taxed as earnings – so you could move up a tax band.
- Take out as much as you want straight away and use it for whatever you want, but you’ll have to pay tax as above.
- The rest of your money stays invested.
- You can choose how much to take and how often.
- If you take too much, or your investments underperform, you may not have enough left to live on in retirement.
- You can leave any funds you don’t withdraw to your family, beneficiaries or charities. If you die after you’re 75, your beneficiaries may have to pay income tax on the money.
- You can move your pension to an insurance company who will provide you with a lifelong, regular income. This income will be taxed as earnings.
- You can take up to 25% as a tax-free lump sum before you set up your annuity.
- There are many types of annuities and features you can select, such as inflation protection and a spouse’s pension.
- If interest rates are low, you may not get much income for your money.
- Provides you with a guaranteed income that will last as long as you live.
- You may be able to pass something on, depending on how you set up your annuity. If you die after you’re 75, your beneficiaries may have to pay income tax on the money.
Please note that the UK Government has announced that from April 2027 it is their intention for unspent pensions to be included in the calculation of the value of estates and could therefore be subject to Inheritance Tax. Please visit fidelity.co.uk/inheritance-tax-changes for more information.
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Talk to someone about your retirement options in more detail
We can help
Close to retirement but unsure about the options and pitfalls ahead? We can offer guidance and advice to help you find the best solution for your retirement. Call us on 0800 41 41 61. We're open 8:30am to 5:30pm, Monday to Friday.
Fidelity’s retirement servicePension Wise
The government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online or call on 0800 011 3797.
Visit www.moneyhelper.gov.ukHelping you choose
Pension drawdown calculator
Pension tax calculator
If you’ve built up a number of pension pots over the course of your working life, bringing your pension plans together into the Fidelity Self-Invested Personal Pension (SIPP) could make them easier to manage.
Not to mention helping you keep an eye on costs and giving you access to a wealth of Fidelity guidance.
You can even track your transfer online, with the status of each request at your fingertips.
Learn more about this flexible retirement income option with the pension drawdown guide.
Important information: this information and our tools are not a personal recommendation for a product, service or action. Before making your decision, please read our pension transfer factsheet. This explains the things you need to consider before you transfer, including fully comparing the benefits, charges and features offered. Pension rules apply. If you are unsure about the suitability of pension investments or transfers, or action you need to take, we strongly recommend seeking advice from Fidelity's advisers or another authorised financial adviser.
