Is leaving my pension pot for now right for me?

If you have another source of income or want to support others after you’re gone then leaving your pension fund invested could be the right choice for you.

Leaving your pension pot for now lets you:

  • Stay flexible
    You can keep your options open. If you don’t need the money now you can leave your pot invested and take it later.
  • Top-up your pension pot
    By continuing to pay contributions into your pension pot you’ll get tax relief on any payment you make and if you’re 55 or over (may be subject to change) you’ll be able to access your money any time.
  • Stay invested
    Your pot will have the opportunity to grow. You could benefit from potential future, tax-efficient growth. This isn’t guaranteed and you could get back less than was put in.
  • Support family
    You can tell us who you'd like to pass your remaining pot to, normally free of inheritance tax.
    • If you die before age 75, this will normally be completely tax free.
    • If you die after age 75 or older, your beneficiaries will be able to access the pension flexibly, at any age, subject to income tax.

What do I need to think about?

  • You may need another source of income
    If you choose to delay taking your money, you may need to carry on working or have other sources of income. You won’t be able to enjoy your income in retirement straight away.
  • Your pension pot isn’t guaranteed
    You run the risk of investments performing poorly and your pot falling in value, it could be worth less than was invested.
  • Shop around
    It's important that you shop around to find the best deal for you. Your pension provider may not offer the option you want or other providers may be able to offer you a better deal. So it's worth comparing what each provider can offer. Find out more about shopping around.

Tax rules and legislation can change, and your tax treatment will depend on your personal circumstances. Any information given is based on our understanding of law and current HM Revenue & Customs practice, as at April 2020.

The information provided here should not be regarded as financial advice. If you are unsure you should speak to a financial adviser. There’s likely to be a cost for this.

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Not sure if leaving your pension invested is right for you?

Your options at a glance:

Option Guaranteed for life? Is my money invested and
does it have the potential to grow?
Can I access my money at any time? Can I pass on what’s left? More information
Take a flexible income No Yes Yes Yes
Take cash from your pension No Yes Yes Yes
Buy a guaranteed income (Annuity) Yes No No No*
Leave your pension for now No Yes Yes Yes

Usually you can't pass on your guaranteed income for life, but you could add on options - for example, to pay a spouse's pension after you die, to keep paying the income for a guaranteed period, or to include value protection which provides a lump sum death benefit.

Access to impartial guidance

We recommend you seek appropriate guidance or advice before you make any decisions. An adviser is likely to charge a fee for this. You can also get free impartial guidance over the phone or face to face with Pensionwise. Go to pensionwise.gov.uk or call 0800 138 3944. Make sure you understand all your retirement options by reading the Money Advice Service guide – Your pension: your choices

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