A pension is a long-term investment. Its value can go down as well as up and could be worth less than was paid in. Laws and tax rules may change in the future. Your own circumstances and where you live in the UK will also have an impact on tax treatment.

What is retirement?

Retirement is usually when you choose to stop working. You’re likely to have more than one source of income in retirement. For example, these could include:

  • The State Pension
  • Personal and/or workplace pension plans
  • Other investments and savings

These days, the line between stopping work and starting retirement has blurred. Some people reduce their hours before they stop work altogether – known as semi-retirement.

Have I got enough money to retire?

Whether you’ve got enough money for retirement depends on your circumstances and what kind of lifestyle you’d like in future.


Could I choose to be semi-retired?

You might be able to semi-retire. And if you do cut down on your work hours, you might decide to take money from your pension plan to make up for your reduced earnings.

You may want to semi-retire so that you still have some income from working, or simply because you don’t want to leave the workforce entirely. You might feel like it could offer you a better work/life balance.

When can I retire?

When you retire is usually up to you. You might want to keep working and saving into a pension plan until you’re confident you can afford your ideal retirement lifestyle.

Your decision could also depend on the types of pension plans you have and when you can start to access your savings from them. Or you might choose not to leave work until you can start claiming the State Pension.

  • The State Pension – The current State Pension age is 66 (rising to 67 by 2028)
  • Defined contribution pension plans – Most personal and workplace pension plans are defined contribution (or ‘money purchase’) plans. You can normally take your pension savings once you reach the age of 55 (rising to 57 from 6 April 2028)
  • Defined benefit pension plans – Some workplace pension plans are ‘defined benefit’ (or ‘final salary’) plans. They typically pay out based on scheme rules. Contact your employer or scheme manager to find out when you can access your pension plan

You can still claim the State Pension if you continue to work beyond State Pension age. And remember, you can take money from your pension plan while you’re still working, provided you’re at an age where you can access your pension savings.

Do I need to think about tax in retirement?

Yes, you’ll need to consider tax. When you take money from a pension plan, 25% is usually tax-free – but the rest is taxed in the same way as income. You can find out more in our tax in retirement guide.

Once you’ve started accessing your pension savings, the amount you can then put into your pot while still getting tax benefits might be reduced. To learn more, visit our pension annual allowance guide.

How can I take my pension money?

How you can take your pension money will be different depending on whether you have a defined contribution or a defined benefit pension plan, or whether you’re accessing your State Pension.

The State Pension

The government pays this out to you every four weeks. You can claim this when you reach State Pension age by contacting the government. Or you can defer it, meaning you’ll take it at a later date.

Defined contribution pension plans

If you have a defined contribution pension plan, you could:

  • Take a flexible income (drawdown) – You can take a flexible income, which means you can set up a regular income, decide how much money to take and choose when to take it. You can start, stop, or change the payments you get at any time
  • Take one or more lump sums – You can take one or more lump sums from your pension pot. You can decide how much you take and when you take it
  • Buy a guaranteed income for life (annuity) – You can use some or all of your pension savings to buy an annuity. Annuities can give you a guaranteed regular income for the rest of your life. You can choose an annuity that provides for others – like a partner or children – when you die

You could even combine these options to suit your needs. If your provider doesn’t offer the option you want, you may need to transfer your plan to another pension provider. Transferring won’t be right for everyone, though, so it’s worth seeking financial advice if you’re unsure.

Defined benefit pension plans

This type of pension plan is offered by employers and will offer you a specific amount of money when you choose to retire (though your retirement date may be set by the pension scheme you’re in). A defined benefit pension plan pays out a guaranteed income for life (an annuity) when you retire. Contact your scheme trustees or employer for further information.


What if I have multiple pension pots?

If you’ve been saving for your retirement, you may find yourself with more than one pension pot. You could consider bringing these together with a pension transfer. It can be easier to see if you’re on track for the retirement you want if all your pension plans are in one place. See if a pension transfer is right for you..

Transferring other pension plans will not be right for everyone. You need to consider all the facts and decide if it’s right for you. 

The decision to transfer is yours. If you're unsure about transferring you should seek financial advice. You can also access free impartial guidance from MoneyHelper.

More retirement resources