Accessing your pension

Newcastle Financial Advisers, established for you by Newcastle Building Society are here to help you select the right option for you when it comes to your retirement.

Since April 2015 you’ve had more choice over how and when you can take money from your pension pot, if you are 55 or over and have a defined contribution pension plan. You may plan to fully retire, gradually retire or you may want to work for longer. Similar to deciding how and when you’d like to retire, you can also decide how and when you’ll use your pension.

No matter how and when you’d like to retire it’s a big decision, which still confuses many people. Face to face financial advice is a good way to help you get what you want out of your retirement.

Your options 

There are various options you can explore to help you tailor your retirement plans. You can choose to mix and match to create a solution that’s right for you.

Not all pension schemes are the same and some providers may not offer every option, so it's important to seek financial advice as it can get complicated.

You can talk to Newcastle Financial Advisers in any of our branches about your pension options, you won’t be charged a fee unless you implement the advice. 

Do nothing

When you reach retirement, you may not need to access your pension savings right away. If this is the case, your pot will stay invested and continue to grow tax-free, potentially providing you with more income once you come to use it.

Guaranteed income for life

If you want the security of a regular guaranteed income for the rest of your life then you can use your pension savings to buy an Annuity. You can do this with your whole pot, or take up to 25% as a tax-free lump sum first, then with your remaining pot you can purchase an annuity to provide a taxable income.

Flexible access

If you want greater control over when you access your pension savings and how much you take then Flexi-Access Drawdown might be for you. Here you can take up to 25% of your pot as a tax-free lump sum and leave the remainder of your pot invested, drawing what you want when you want. Each withdrawal will be added to your income and taxed at the appropriate rate.

Please be aware you need to consider how much you can afford to withdraw as there is a risk you may run out of money.

Take small regular lump sums

If you don’t need to take a big tax-free lump sum and still want regular access to smaller lump sums when you need them then you could consider Uncrystallised Funds Pension Lump Sums.

Each withdrawal you make is split into a 25% tax-free lump sum with the remaining 75% added to your income and taxed at the appropriate rate. This is similar to Flexi Access Drawdown where your pension savings remain invested until withdrawn.

Please be aware each time you make a withdrawal, there may be charges and your pension pot will reduce in value each time, so there is a risk your money will run out.

Take it all in one go

If you need access to all of your pension savings, you can withdraw your whole pot in one go by making a Full Withdrawal. Usually the first 25% of your pot is tax free and the remainder of your pension pot is added to your income for that year and taxed accordingly. If you do this you could find yourself with a large tax bill and it is up to you to manage how you spend this in retirement.

Blended approach

What’s right for you will depend on various factors such as your age, health, other savings and dependants. It may be that a mix of the available options is needed to help you achieve your own plans for retirement which is why in all cases it is better to seek advice from a qualified professional.

There are pros and cons with each option. Seeing a Financial Adviser is important as accessing your pension is complicated; get it wrong and you could run out of money or pay unnecessary tax.

After many years of hard work, deciding how you use your pension should not be a decision which is taken lightly or rushed.

Click below to book to speak to a Financial Adviser from Newcastle Financial Advisers. You only pay a fee if you implement the advice.

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Newcastle Building Society introduces to Newcastle Financial Advisers Limited for advice on Investments, Pensions, Life and Protection Insurance and Inheritance Tax Planning. Newcastle Financial Advisers Limited is an appointed representative of The Openwork Partnership which is a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.