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.
If you are age 50 or over, free and impartial government guidance about retirement options is available at PensionWise (this is now part of the MoneyHelper service).
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. Some of these are available through Smart, although you should consider all your options before deciding which option is most suitable for you and who you want to secure it with.
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.
Take your pension savings all in one go or as a series of lump sums
You can take your pension savings as a single lump sum. Not forgetting, 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 be added to your income in the year for tax purposes.
Because of their pension history before 5 April 2006, some members may be able to take a higher (than 25%) proportion of their pension savings tax-free. We will let you know if this applies to you. 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:
If the value of your pension savings is £10,000 or below, you can choose to take your money as a small pot commutation. 25% (from 6 April 2023, this is capped at £268,275 unless you have a form of protection from a previous scheme that allows you to take more than 25%) is tax-free and the remaining amount is taxed at your marginal rate of income tax.
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.
Or as a series of lump sums
We currently only offer a single lump sum under the uncrystallised pension lump
sum option. We are working on offering this option as a series of lump sums, but this
is currently not available in the pension scheme.
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. Any tax-free cash entitlement can be received in one go, but you can also choose to take this in stages if you prefer. Lump sums taken above your tax-free cash entitlement will be 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 offer this option through our new Smart Retire product.
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 then decide if this increases each year and if someone else gets paid after you die.
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.
We do not offer annuities, 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.
Mix your options
You could also choose to take your pension savings using a combination of 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 (from 6 April 2023, this will be capped at £268,275 unless you have a form of protection from a previous scheme that allows you to take more than 25%). 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.
We offer this option through our new Smart Retire product.
Introducing Smart Retire
We've created a new innovative retirement product that gives you the flexibility to plan and manage your pension savings in a personalised way to create a sustainable income in your retirement.
Smart Retire is easy to use and you can:
Plan your income
It's simple to make withdrawals or change how much you receive
Have everything in one place
Check your pension savings at a glance, and see how long your income could last
Manage your money
Easily move your money between your income and savings pots
To find out more, visit www.smartretire.uk.
Things to consider
Whatever you decide to do with your pension, think carefully before you make any decisions. MoneyHelper and Pension Wise – part of the MoneyHelper service – have a lot of useful information to help you turn your pension pot into retirement income. You can seek advice from a financial adviser using a service such as MoneyHelper. Smart Pension does not offer advice.
What happens next
If you're ready to take your pension savings, please complete our retirement options application form (for all options, excluding Smart Retire). 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.
If you would like to use our new retirement product, Smart Retire. You can register online by visiting www.smartretire.uk.