Fix and flex

Yes – but there are some limits.

Before you retire, you can normally pay up to 100% of your earnings into your pension – or up to £60,000 if you earn more. This is called your annual allowance.

Taking tax free cash doesn’t affect this. But once you take any taxable income from your pension, something called the Money Purchase Annual Allowance kicks in. After this, you can normally pay in a maximum of £10,000 a year.

There are some exceptions – for example, if you’ve only taken money from small pots (less than £10,000).

You can change the ‘flex’ part, but not the ‘fix’ part.

Fixing just means buying an annuity (guaranteed income for life) with part of your pension. You can’t make changes to this once you’ve bought it.

The rest of your pension will move into a flexible income (drawdown) pot that you can use in various ways. You can set up a regular monthly income, take lump sums when you need them, or even withdraw the whole pot at once (though the last option generally isn’t tax efficient).

You can also use some or all of this pot to buy more annuities later, ‘fixing’ a larger portion of your income.

Most providers have a maximum age for buying an annuity. With Standard Life, it’s 85.

When you reach 55 (57 from 6 April 2028) you can usually take 25% of your total pension pot across all pension plans as one, or multiple, tax free lump sums.

You don’t have to take tax free cash as one lump sum, and using this money as part of your flexible income could mean paying less tax overall. At Standard Life we call this 'tailored drawdown'.

You can use the rest of your pension to set up a fix and flex income – buying a guaranteed income for life (annuity) with part of your pension, and using the rest flexibly.

Tax treatment will depend on your individual circumstances including where you live in the UK. Tax will be deducted from your income before it is paid.

When buying a guaranteed income, you’ll be able to choose from various options for supporting your loved ones after you die. This may include a dependant's income – a regular income to a loved one – or a value protection lump sum. These are sometimes called ‘death benefits’.

This needs to be set up when you buy your annuity – you can’t add it later.

Currently, your remaining pot can normally be passed on to loved ones free of inheritance tax. The exact tax rules are complicated – read our inheritance tax guide to find out more.

From April 2027, the government have announced their intention to include unused pension savings when calculating the value of estates and could be subject to inheritance tax. The full details of how this will work are still to be confirmed.

Important: Make sure you’ve checked the beneficiaries on your pension plan. We use this information to help decide where your pension should go to when you die, as your Will does not take care of this.

To update your beneficiaries, log in and choose Actions (in our app) or go to Your details (on your customer dashboard).

Generally no – but there are some exceptions.

If you're in serious ill health you may be able to access your pension before age 55. You can find more information on the HMRC website

You may also be able to take your pension early if you have a ‘protected pension age’. This is rare but may apply if, for example, you are a professional sportsperson. The rules vary between pension plans and providers, so check carefully.

Please call us on 0800 634 7477 so we can discuss all of your options.

Call charges will vary.

If you’re entitled to receive state benefits like Universal Credit or Pension Credit, you could lose your entitlement or be able to claim back less if you start accessing your pension savings. This is because your pension savings will count as a form of income or could be treated as ‘capital’. So do check if you could be impacted by this.

This can change depending on whether you’re over or under Pension Credit age. You can find out more on this from Citizens Advice.

If you're under age 55 and have a terminal illness with a life expectancy of less than 12 months, you may be able to access your pension early and you may pay less tax.

Please call us on 0800 634 7477 so we can discuss all of your options.

Call charges will vary.

Some pension plans have 'protected tax free cash'. This means you may get more than the normal 25% tax free.

Please call us on 0800 634 7477 if you'd like to take money from a pension with protected tax free cash.

Call charges will vary.