When can I access my Pension?

The earliest you can take a pension income is age 55, although few people manage to build up a sufficient pension pot to retire then. Pensions are more commonly taken between ages 60-70.


How do I take an income?

There are three ways to receive an income from your pension.

 

Annuity Income drawdown

UFPLS ( Uncrystallised Funds Pension Lump Sum)

Involves swapping your pension fund for an income for life. Annuities are offered by insurance companies and are effectively a gamble on how long you'll live. Live for longer than average and you'll probably benefit, but die before and you may lose out, although it's possible for the income to then switch to your spouse (assuming they outlive you). 

Annuity rates depend on how much longer you're likely to live (which depends on factors including age, health and whether you smoke) and the cost to insurer of guaranteeing the income (which broadly depends on gilt yields). Annuity rates vary (due to the latter), so it's hard to predict what they'll be when you retire.

 

Alternatively you can leave your pension fund invested and draw a regular income, usually restricted to no more than the equivalent income you would receive via an annuity. 

This gives much greater flexibility, but increases risk as future income will depend on investment performance - and if performance is bad your pension pot could run dry.

This allows you to take any amount of money from your pension as a cash lump sum, whether as an income or amounts as and when you require it or even completely cashing in your pension.

 

The first 25% pension of each payment is tax free and the rest is taxed at our marginal rate of tax.

 

UFPLS is only available to people aged 55 or over who haven’t already taken tax free cash, gone into pension drawdown or purchased an annuity. 

 

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