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Take your pot as cash

The Pension Freedoms that are outlined here give you freedom and choice as to how to take money from your pension pot. You could withdraw the whole fund, if you wish.

While this may sound appealing, there are risks with such a strategy. The first 25% will be tax free, but the rest will be subject to  income tax at your highest rate. Even if you are a basic rate tax payer, a substantial pension pot could push you into a higher rate tax band, so you could face a large, but avoidable tax bill.

Your pension is also supposed to provide for your income in retirement, so it may be unwise to draw all your money out early, and find yourself relying on rather meagre State Benefits further in the future.

Taking your pot as cash

Advantages                   Disadvantages                                             
Gives you access to your whole potDepending on how long you live, the money may be insufficient to support prolonged retirement
Potentially frees money to settle debts etcYou will potentially incur a large tax charge at your highest rate
 This strategy won't provide a regular income for you or your dependants after your death
No option to review the decision in the future

Once you make this decision, there is no opportunity to change your mind, so you do need to be sure that you are doing the right thing, and will continue to have enough money to live on in a retirement period that could last 30 years or more.

Forward planning and quality financial advice will be key to finding the best retirement solutions for you.

At Wesleyan we're here to help, our financial consultants can help you find the solution that's right for you.

Contact us

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