Your top retirement questions, answered

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When it comes to pensions, there’s no such thing as a stupid question. Retirement planning can be complex, and it’s important to have all the information you need to make decisions with confidence.

To help, we’ve compiled answers to some of the most common questions we’re asked every day by our customers. 

What type of workplace pension do I have - defined benefit or defined contribution?

The most common types of workplace pension are defined benefit and defined contribution. You may have a defined benefit pension, a defined contribution pension, or a combination of both.

A defined benefit pension will pay you a guaranteed income for life in retirement. The exact sum you’ll get is usually based on how long you’ve been a member and your salary – either your final salary or your average earnings over your career.

A defined contribution pension builds up a pot of money for your retirement. Its size depends mainly on how much you and your employer contribute, and how your investments perform over time. We’ll get into what this means later.

The type of workplace pension you have depends on your agreement with your employer – and some people have a combination of both defined benefit and defined contribution pension plans.

If you’re not sure, MoneyHelper’s pension checking tool can help you understand your pension type.

Is my personal pension a defined benefit or defined contribution pension?

If you have a personal pension, it’s likely to be a defined contribution pension. It’s similar to a defined contribution workplace pension, but generally without top-up payments from an employer.

Personal pensions also benefit from tax relief – more on this a little later on.

What happens to my pension when I die?

When someone dies, what happens to their pension depends on the type of pension they have and the rules of their scheme. 

A defined benefit pension usually pays out a reduced regular income or a lump sum to a dependent, like a spouse, civil partner or dependent child. You can’t usually list other beneficiaries like a friend or non-dependent adult child.
 

A defined contribution pension usually pays what’s left in your pension pot to your listed beneficiaries, regardless of whether they are your relatives or dependents. They may be able to opt for a lump sum payment or receive a regular payment amount, depending on the rules of your scheme. 
 

The State Pension can’t usually be passed on to a beneficiary after death. However, some people may be eligible to inherit certain State Pension benefits from their spouse or civil partner, depending on their age and circumstances.

Is my pension invested, and what does that mean for me?

Both workplace and personal defined contribution pensions are invested into funds

Defined contribution pensions are invested in funds, regardless of whether it’s a workplace or personal pension. Defined benefit pensions work slightly differently – the scheme provider may invest contributions to fund future pensions, but the outcome of the investment doesn’t affect your retirement income.

If you have a defined contribution pension, your final pension amount will depend on how well investment markets perform. Usually, pension funds are invested into diverse portfolios to balance risk. However, investments can go down as well as up, and your contributions could be worth less than what you pay in. 

If you have a defined benefit pension, you will receive a guaranteed income regardless of how well investments perform – it’s up to your employer to make sure they have the funds necessary to meet the terms of your pension agreement.

Is it worth bringing my pensions together?

Most of us change employers over the course of our careers, which means we can end up with multiple pension pots.

Consolidating your pensions could be a good idea, as it can make your pension simpler to manage, help you build a clearer picture of your retirement finances and give you more say in your investments. Older pensions may also have hidden charges, which you may be able to reduce by moving to a newer scheme.

However, there are sometimes risks to consolidating your pensions. Depending on your provider’s terms, you could lose out on valuable benefits like guaranteed annuity rates or defined benefit entitlements. Some providers may also charge a fee if you choose to transfer your pension.

For that reason, it’s important to understand the terms associated with each of your pension pots, and weigh up the pros and cons before making a decision. If you’re not sure, it’s a good idea to speak with a financial adviser, who can offer guidance on the best approach for you.
 

How do I know if I have enough to retire?

‘Enough’ is a subjective term that means different things to different people. To understand how much is enough for you, consider factors like mortgage payments (or rent, if you don’t own a home), regular household bills and groceries. You should also consider lifestyle costs, like how much you would like to spend on hobbies, holidays, clothes, gifts and other non-essential spending. 

The Retirement Living Standards provide a useful guide to the amount of annual income you would need for a low, moderate and high standard of living in retirement. 

Remember that retirement can last for decades. 19% of retirees tell us they didn’t realise how many years they would be retired for, which is why planning ahead is so important.
 

Do I need to take my pension by a certain age?

There isn’t an upper limit to the age by which you need to take your pension. However, when you turn 75, some tax rules change, so it’s important to understand how these changes could impact your finances.

When can I start taking my pension?

You can usually start taking money from a defined contribution pension plan at age 55. That age is set to increase to 57 in 2028.

Can I take my pension and keep working?

Yes, if you have a defined contribution pension, you can usually start accessing it from age 55 while continuing to work. You can also keep working beyond State Pension age while receiving a pension (that age is currently 66; it’s increasing to 67 between 2026 and 2028).

If you choose to do this, it’s important to understand the tax implications. Income from your personal or workplace pension, your State Pension, and employment earnings are all taken into account when calculating your rate of income tax. Receiving multiple sources of income could push you into a higher tax band.

Speaking to a financial adviser can help you understand the best route.
 

How is my pension taxed when I take money out?

If you have a defined contribution pension, you can usually access up to 25% of it in a tax-free lump sum from age 55 (rising to age 57 in 2028). 

You don’t have to take the full amount at once; some providers allow you to access your tax-free amount in stages. 

The rest of your pension will be subject to income tax when you start withdrawing it. The rate of tax you pay depends on your level of pension income, your other sources of income, and your personal circumstances. 

Why is some of my pension tax-free and some taxed?

Pension contributions already receive tax relief – effectively, the government tops up your savings by 20% (and more if you’re a higher- or advanced- rate taxpayer). This is to help your contributions grow faster.

For that reason, only some of your pension income is tax-free when you withdraw it.

Pensions are personal. There’s no one-size-fits-all approach. If you’re feeling unsure, don’t worry - there’s support available.

If you’re a Standard Life customer, you can also review your plans online at any time. Head to our website to learn more about our online services or visit our support page if you have questions or need to get in touch.

It could also be helpful to speak to a financial adviser, who can talk you through your options and help you decide what’s right for you.

Find out more

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The information here is based on our understanding in June 2026 and shouldn’t be taken as financial advice.

A pension plan is an investment. Its value can go down as well as up and could be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.

Standard Life accepts no responsibility for information on external websites. These are provided for general information.