Ready to access your pension pot?

Important information - please remember that the value of investments and the income from them can go down as well as up, so you may not get back what you invest. Tax treatment depends on personal circumstances and all tax rules may change in the future. You cannot normally access your pension until age 55 (57 from 2028).

It goes without saying that retirement plans are best laid carefully. You may feel like you’ve done the hard yards: you’ve considered the type of retirement you want, and how much that might cost; more importantly, you’re reasonably confident you’ve got the reserves to meet it. There are, however, a few questions worth asking yourself before moving or accessing your money. Answering these questions can help ensure your hard-earned retirement pot lasts as long as you need it to.

1.    Are you clear on fees?

The fees paid on an investment portfolio can seem insignificant over the short-term, but they stack up over the long-term. They can also put a major dent in your annual retirement income. 

A retirement pot may need to last 20+ years, so check your charges and make sure you know how much you will be paying.

For example, if you have a pension pot of £250,000 with associated fees of 0.5%, you’ll pay around £1,250 a year. 

But charging structures vary by pension provider so it’s a good idea to make sure you know if you’ll be paying for (to name a few):

• service fees
• annual fees
• set up fees
• withdrawal fees
• exit fees 
• transaction charges

Not all providers will charge fees for these services, and the fees may vary on the providers that do, so it’s important to do your research beforehand.

With Fidelity, there is no additional charge to drawdown your pension from our award-winning SIPP. There’s no set up, one-off withdrawal or annual drawdown fees. All you pay is our service fee for our SIPP and any charges for the investments you choose e.g. fund management charges. We've negotiated discounts on many funds on our platform and we're always looking to add more.  Share dealing and transaction fees may also apply.   

2. Have you checked your investment choices?

The investment choices made at the point of retirement can make a big difference to how long your retirement savings last. Take too much risk early on, and you may find that your pot can’t sustain you through retirement. Take too little and you may find that your pot doesn’t grow fast enough to beat inflation. It’s a fine balance.

There is also the question of how involved you want to be in managing your investments? Even if you are comfortable managing investments, consider whether you’re likely to want an active role as you get older. 

To help you achieve some of these things there are guidance tools available to help. Fidelity’s Navigator is an example of a tool which is designed to help those acting for themselves.

Or, of course you can speak to a retirement adviser - typically for a fee - who can help you choose investments to provide the income you need and will monitor the level of income being paid to you to help ensure it remains sustainable. Find out how  Fidelity's retirement specialists can help you with your investment choices.  

3. Are you confident navigating the tax system?

Navigating the tax system confidently and correctly can help ensure you won’t accidently land a big tax bill. 

Under current rules, at the age of 55, 25% of your pension savings can normally be withdrawn tax free. You can withdraw more than that, but any withdrawals over and above the 25% threshold are added to your income for the year and taxed at your marginal rate. Of course, you can choose not to withdraw any money and leave it invested in your pension pot. 

Just remember that anything you pay in tax erodes the amount you have to live on, so it’s really important to plan and consider any pension withdrawals carefully. The lump sum allowance (LSA) - the maximum amount of tax-free cash you can take from your pension savings in your lifetime. You can take 25% of your pot tax-free, as long as this amount is not higher than the LSA. If you are unsure about tax implications a retirement adviser can help you navigate this complex area. Some people might have a higher allowance if they also had a higher protected lifetime allowance.

Another area to consider is the limit of your pension savings. 

Important information - this information and our Navigator tool are not a personal recommendation for any particular investment.  You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please contact Fidelity’s retirement service on 0800 860 0048 or refer to an authorised financial adviser of your choice.