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What is Smart Retire and how does it work?
What is Smart Retire and how does it work?

Understand what Smart Retire is, how it works and get answers to our most common frequently asked questions.

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Written by Smart Pension Support
Updated over 4 months ago

About Smart Retire

Smart Retire is a flexible, low-cost and easy way to manage retirement money.


How it works

It gives you several different retirement options (called ‘pots’) to provide you with an income in retirement.

Retirement pots, with purpose

Flexible income pot – Use this pot to take a monthly income in your early retirement years. We’ll show you how much you could take each month to help you plan your retirement.

Later life pot – Leave money invested to buy a guaranteed income (annuity) from another provider later in retirement. Buying an annuity later means you might get a better rate.

Inheritance pot – Put some money aside to leave to loved ones or an organisation that’s important to you. We’ll leave your money invested in a long-term fund.

Rainy day pot – Dip into this pot when you need to. You can withdraw money from this pot whenever you want and it will be in your bank account within eight working days.

What you need to know before you join Smart Retire

  • You need to be 55 years or older

  • It is an online product only and you need a valid personal email address

  • You don’t need to take financial advice to join Smart Retire, but we recommend you seek advice if you feel appropriate to your circumstances.

  • You should consider consolidating your other pension savings before you join, as once you’ve joined you are unable to add any more pension savings to your Smart Retire account.

  • You will need to decide if you want to claim a tax-free lump sum equal to 25% of your pension savings

  • You will pay a charge for using Smart Retire, this can vary depending on your arrangement. Please see your Smart Retire member guide for more information.

How to join Smart Retire

Joining Smart Retire is easy – all you need to do is create an online account.


It typically takes less than 20 minutes to complete your online registration which includes an illustration of how much income you could get, as well as how your retirement pots are split.

Once you’ve completed your online application, we will need to verify your identity before your account can be activated.

Answers to our most common Smart Retire questions

What options are available with Smart Retire?

  • Take a flexible income (flexible income pot) – you can take a flexible monthly income that you can adjust to meet your personal income needs.

  • Get a guaranteed income later in retirement (later life pot) – Keep some money invested to grow for later in retirement. For example, to buy an annuity that provides a guaranteed income for life.

  • Withdraw money when you need it (rainy day pot) – Withdraw cash lump sums whenever you need to pay for planned expenses, like home improvements or a holiday.

  • Leave money to your loved ones (inheritance pot)– Hold some money back to leave as an inheritance to people or organisations you care about when you die.

Can I split my money into one or more retirement pots?

Yes, Smart Retire allows you to split your money between the four retirement pots. They all have a different purpose.

Do I need to get financial advice to use Smart Retire?

No, Smart Retire is a guidance product and you do not need to have financial advice to use it. However, based on your circumstances you may choose to get financial advice before deciding to choose Smart Retire.

What are the costs and charges for joining Smart Retire?

We’re committed to being transparent when it comes to charges. We don’t charge you anything to join and there are no withdrawal fees.

There will be an annual management charge which depends on which of the pots you have selected. Please see your Smart Retire member guide in your online account for more information.

Should I bring my pension savings together before I join Smart Retire?

We recommend that you consider whether you’d like to combine your pension savings before you add them to your Smart Retire account. This means you’ll have everything in one place.

Please note once you have joined Smart Retire, you are unable to add or transfer any other pension savings. This is why we recommend that you consider combining your pension savings before joining.

Can I take a 25% tax-free lump sum before I join Smart Retire?

Yes, we will ask you before you join Smart Retire whether you’d like to do this. Please also note that we also recommend considering bringing your pension savings together before you join Smart Retire. This is because once you’ve joined you’ll be unable to add any further pension savings.

Are pension withdrawals taxed?

Lump sum payments over and above your tax-free cash will be assessed as income for tax purposes. This means income tax is calculated through Pay As You Earn on the assumption that the lump sum will be your monthly income until the end of the tax year. This could result in you paying more tax than is due.

If you also receive a regular monthly income, the overpayment of tax will be recovered when we pay your next regular income payment. Otherwise, you can reclaim an overpayment by contacting HMRC.

You should also be aware that claiming a lump sum could result in your earnings for the current tax year putting you into a higher rate tax band. You might want to consider spreading your withdrawals over different tax years.

How long does it take for my Smart Retire account to be up and running?

After you’ve completed your online registration, we will need to complete the verification process. We will then need to start the disinvestment and investment process to add your funds to your Smart Pension. This can take up to 15 working days to complete.

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