What this form is for
Only use this form if your pension pot is £50,000 or less and you want to take all of the money.
Are you in serious ill health?
Serious ill health is where your life expectancy is less than one year. If you’re suffering from ill health, you might be able to take all of your pension as a tax-free lump sum. If you’re in serious ill health, don’t complete this form. Call us on 0800 634 7477 and we can help you.
Important things to think about
Taking your money now could mean you have less for later on. You could be left with no source of income for your retirement other than the State Pension.
Before you go ahead, please take some time to read the information below. This is to help you feel confident, understand your options and make sure you're happy with your choice.
You can find out more about the information we give throughout at moneyhelper.org.uk Or call us on 0800 634 7477.
We've also sent you a Summary of benefits and a MoneyHelper guide. These will help you understand the options available and possible tax implications. We may have sent these to you separately in the last 6 months. If you don't have these - call us for copies before completing the form.
We'll ask you to confirm you've read and understood this information at the end of the form.
We strongly recommend you get guidance or advice before deciding what to do.
Free impartial guidance with Pension Wise
Get free guidance over the phone or face to face with a pension specialist.
Pension Wise is a government backed service from MoneyHelper. They offer impartial guidance to over 50’s.
They don’t recommend products or tell you what to do with your money, but they will help you understand your overall financial situation. Some things they’ll explain are all your retirement options, tax implications and what you should check before you make any final decisions.
The quickest way to book an appointment is online at moneyhelper.org.uk/nudge-public. You can call them free on 0800 100 166. Or call us and we can arrange this for you.
Speak to a financial adviser
If you’re not sure what to do, we’d encourage you to get help from a financial adviser. There’s likely to be a cost for this but it could save you money in the long run. An adviser will look at your circumstances and make a personal plan that meets your financial goals. You can get help to find an adviser at moneyhelper.org.uk. At the end of the form, we'll ask you to confirm what you chose to do for guidance or advice.
Pension scams are on the rise in the UK
As you access your pension it’s important to be aware of potential investment scams. These scams can be very convincing and could lead to you having a lifetime’s worth of savings stolen in a moment.
If you’re worried about a potential scam – call the FCA helpline on 0800 111 6768. To help you check if an investment or pension opportunity is a scam, use the tool on the FCA's website.
Understand the tax you’ll pay
You’re making an important decision that has long term consequences and you should think about the following implications carefully.
The tax you could pay
When you withdraw money from your pensions it counts as income and is usually taxed like any other kind of income. By taking all the money from this plan, you’ll use up all your tax-free lump sum. This is normally 25% and the rest is subject to income tax.
The amount you pay usually depends on your total income for the year and your tax rate. Most people have a tax-free personal allowance, then tax is paid on the income within each tax band. Check current tax rates and allowances at gov.uk/income-tax-rates
How we’ll tax your payment
We follow HMRC guidance which means we normally have to deduct more tax upfront. You then have to reclaim it later. Get details on how to do this at gov.uk/government/collections/income-tax-forms.
Reduce your tax
You may pay less tax if you spread out your cash withdrawals over more tax years and keep below higher rate bands. Or you might be able to take tax-free lump sums from other pensions you have.
Get more information about pension allowances.
Future payments into your pensions
You can still pay into your pension plans. This includes payments from your employer or any third-parties.
When you take more than the tax-free lump sum out, the maximum amount that can be paid into any of your defined contribution pensions, without a tax charge, reduces to £10,000. This is called the ‘Money Purchase Annual Allowance (MPAA)’. If you go over this limit a tax charge of up to 46% could apply.
We’ll send you a statement confirming you’ve accessed your pension. You’ll then have 91 days to tell your other providers and employers.
Defined contribution pensions can be a workplace pension or a private pension set up by you. Your other pension providers can confirm if your pension is a defined contribution pension.
Lump sum allowance
The Lump Sum Allowance is the limit on the amount of tax-free lump sum you can get from all your pension schemes. See the current lump sum allowance limits.
We need to check whether taking a lump sum from us will mean you have taken more than your maximum Lump Sum Allowance. We'll ask you more about this later in the form.
Reinvesting your tax-free lump sum into your pensions
If you’re planning to take your tax-free lump sum and pay that into any pension, you need to be aware of ‘pension recycling’ rules. It could be pension recycling if you intend to use the tax-free lump sum to make a ‘significant payment’ into a pension to get tax relief. This could also be a payment made before you take your tax-free lump sum. It includes payments made by you, your employer or any third party.
You can read our guide for an understanding of what is meant by a significant payment and for more information on pension recycling rules.
If HMRC decide you’ve broken pension recycling rules, you might have to pay tax on the whole of the original tax-free lump sum. This will be the case even if you only recycle some of the money.
Later in the form, we’ll ask you to confirm that you’ve understood what recycling means and that you will not ‘recycle’ your tax-free lump sum.
Taking all your money now could mean you have less for later on.
If this is your only pension, you could be left with no source of income for your retirement other than the State Pension.
Any growth in the value of the money you take out of your pension is taxable, whereas any growth is tax-free within the pension pot.
You can take your money any time you like. So if you don’t need all of your pension money now, think about just taking what you need.
Leaving your pension savings to your loved ones
Pensions can be a tax efficient way to save your money and leave it to your loved ones. Any money that you take now, and don’t spend, could be liable for inheritance tax if you die.
Entitlement to benefits
Taking money from your pension plan could affect you or your partner or spouse’s entitlement to ‘means-tested benefits’. This could include things like housing benefit or income support. Your entitlement to future benefits like help with long-term care, could also be reduced or stopped.
Some government benefits are means-tested. These are benefits awarded based on a person's financial situation. For more information go to gov.uk.
Pension income and debt
If you plan to use this withdrawal to repay debt, there may be early payment penalties. You should also think about the tax you’ll pay. This means you may not be able to pay off as much debt as you want to.
If you have a bankruptcy or County Court Judgement against you, this payment could be used by creditors to pay off outstanding debts.
Make sure you understand all the options available to manage your debts. There may be a better option than taking money from your pension.
If you need help with managing debts, try National Debtline or Citizens Advice for support. MoneyHelper also has some useful information around dealing with debt.
Important benefits you could lose
If you take your full pension, you may lose valuable benefits such as life cover or contribution protection. For example, if your pension includes life cover, this would be lost. This means that less money would be paid out to your family in the event of your death.
Check your latest yearly statement about any guarantees or protection you might have.
Are you invested in With-Profits?
With-profits investments may include potentially valuable guarantees to give you some protection if investment returns are poor.
See your most recent yearly statement to check if you’re invested in with-profits. If you’re unsure of anything or need more information please call us.
Is your employer paying into this plan?
If you take all of your money, your plan will normally close. You could then miss out on future employer contributions. You might not be able to rejoin in the future or the basis of rejoining could be different.
Keeping your plan open
If your employer is paying in, depending on your plan type you might be able to keep your plan open. This means they can continue to pay in. You may need to leave up to £100 in your plan.
You can’t keep your plan open if you’re relying on scheme specific protection to:
- take your money before age 55
- take more than 25% of your pension tax-free
Scheme-specific protection is additional pension plan rights that are kept after pension rule changes.
Later in the form, we’ll ask you to confirm if you want to keep your plan open
Please complete the form below
This information is based on our current understanding in October 2024. Laws and tax rules may change in the future.
Your options and the tax you’ll pay depends on your personal circumstances.
If you need advice you should speak to a professional like an adviser or an accountant.
A pension is an investment and its value can go down as well as up and may be worth less than was paid in.
You normally need to be 55 (rising to 57 from 6 April 2028) to access your pension.
Data protection
We’re committed to maintaining the trust and confidence of our customers. Our Privacy Policy explains how we use our customers’ personal information. It explains when and why we collect personal information about our customers, how we use it, the conditions under which we may share it with others and how we keep it secure.
It also explains how you can obtain details of the information we hold about you, and the choices you have about how we use that information.
Money Laundering
To comply with the Money Laundering Regulations we need to verify the identity of our customers. We do this by carrying out an on-line check with a reference agency.
The agency will verify your identity against public records and confirm whether you have a credit history (but will not disclose any information about your actual borrowings). The agency will add a note to show that an identity check was made to your credit file, but the information won’t be seen by any third parties.
We may need to contact you for evidence of your identity if we can’t verify you through these online checks. We might also need a copy of your bank statement.
Acceptance of this application is subject to satisfactory completion of identification checks within 30 days of the application date.