You can currently access your pension savings at any time once you turn 55.

There are a lot of rules around how you use your pension savings, to make sure they last as long as possible. 

Free and impartial government guidance about retirement options is available at PensionWise.

We can't provide personalised advice on what you should or shouldn't do with your pension savings, but there are some common options you might like to consider.

1. Keep your savings invested for longer

You might decide that you aren’t ready to take your pension savings yet and would like to keep them invested.

Keeping your pension savings invested will give your money a chance to grow, but you should be aware that the value of your pension could go down as well as up.

If you would like to keep your savings invested, you should make sure you keep

your retirement age updated in your Smart Pension account. You can change your retirement age by signing in at www.smartpension.co.uk/sign-in, selecting Funds and clicking Change retirement age.

To find out more, read our retirement options guide.

2. Take your pension savings all in one go or as lump sums

You can take your pension savings as a single lump sum. You can usually take a quarter of your savings tax-free and the rest will be taxed.

You should be aware that you could pay a higher amount of tax if you choose this option, as the lump sum will get added to your earnings in the year for tax purposes. This may also affect your entitlement to any state benefits you currently receive.

There are two methods of taking your money using this option. They are:

1. If the value of your pension savings is below £10,000 you can choose to take your money as a small pot commutation. 25% is tax free and the remaining amount is taxed at your marginal rate of income tax.

2. If the value of your pension savings is above £10,000 then you could choose to take your money as an uncrystallised funds pension lump sum. 25% is tax free and the remaining amount is taxed at your marginal rate of income tax.

To find out more, read our retirement options guide.

3. Take your savings as a flexible income

Taking a flexible income means you leave your pension savings invested in your pension account and take a series of cash lump sums over time as income. Each of those cash lump sums are 25% tax free with the remaining amount taxed at your marginal tax rate.

You should be aware that leaving your pension savings invested means your money could go up and down in value.

We do not currently offer this option, so you will need to transfer your pension savings to another provider if you’d like to take your savings as a flexible income.

To find out more, read our retirement options guide.

4. Buy a guaranteed income (also known as an annuity)

Taking your savings as a guaranteed income (also known as an annuity) gives you the security of knowing that your income is guaranteed, however long you live.

How does it work?

You can use your Smart Pension account to buy a guaranteed income for life from an insurance company. You can decide if this increases each year and if someone else gets paid after you die.

We do not currently offer annuities, so you’ll need to transfer your pension savings to another provider if you’d like to take this option.

If you would like to buy a guaranteed income, you should be aware that there are a range of different annuities, each offering different features. This means you should shop around to find the best option for you.


To find out more, read our retirement options guide.

5. Mix your options

You could also choose to take your pension savings using a combination or all of the options. If you have more than one pension, you can use the different options for each pot. You can also combine your pension accounts together to make larger pots.

Please note, you can take up to 25% of your pension savings as a tax-free lump sum. The rest of your savings will be taxed in the same way your earnings are taxed while you’re working, except you won’t have to pay National Insurance.

Please note, Smart Pension does not offer this option, so you’ll need to transfer your pension savings to another provider if you’d like to take this option.

To find out more, read our retirement options guide.

Things to consider

Whatever you decide to do with your pension, think carefully before you make any decisions. You can seek advice from a financial adviser, using a service such as unbiased.co.uk. The Pensions Advisory Service and PensionWise – part of the Money and Pension service – have a lot of useful information to help you turn your pension pot into retirement income.

If you're ready to take your pension savings, please complete our retirement options application form. Send the form and relevant documents to the address provided, and we can start this process. If you need help completing and returning this application form to us, read our step by step guide.


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