What are the tax implications?

Taking money from your pension may be taxed. If you withdraw more than your tax-free portion (typically 25% of your pension), you will face consequences. You can leave the remainder invested until you decide to make additional withdrawals or establish a regular income. However, before making any decisions, you must ensure that you understand the implications. Otherwise, you may find yourself with an unexpectedly large tax bill.

What are the fees?

When you retire and begin withdrawing funds from your pension your pension provider may charge you fees. Some pension providers charge a fee for each withdrawal, whereas others charge a flat rate or a percentage of your pension pot. Other fees, such as an administration fee, may also apply. Taking money from your pension will also reduce the amount of income you have in retirement, so think carefully before taking any money out of your pension pot.

How long will the money last?

Consider how long the money will need to last. If you take a lump sum of money, it is unlikely to last as long as if you take an income. This is something to consider when making your decision.

What if you need more money later?

If you withdraw money from your pension now, it may not be there when you need it later in life. This is something to think about if you believe you will need more money in the future. Even if the value of your pension has decreased, this does not necessarily imply that you will have to postpone your retirement. Could you withdraw less from your pension until their value recovers and instead use other savings to bridge the gap? Could you postpone any major purchases you had planned?

A pension is a long-term investment not normally accessible until age 55 (57 from april 2028 unless plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. Tax treatment varies according to individual circumstances and is subject to change.

Please contact us for more information on how we can help protect your future financial well-being and the options available to you.