Take all your pension money at once
Learn about taking all your pension money out in one go, and how this can affect tax.
Can you take all your pension money at once?
Yes, you can take all the money out of your pension as a single amount, with 25% normally being tax free. We’ll explain how this works with People’s Pension and what to consider before choosing this option.
However, give yourself time to review the options and understand the possible effects before deciding to take the whole amount of your pension. For example, you may have to pay more tax.
How to take all your pension money at once with People's Pension
You can start taking your pension money from age 55 (57 from 2028).
What you need to know:
- If you have less than £10,000, you normally have to stop paying in first to take all your money. This will mean that your employer’s contributions and tax relief will also stop. Once you’ve taken all your money, your account will close. Find out more about your tax-free lump sum.
- If you have more than £10,000 and take your money all at once, your account will stay open.
Other pension providers may have different rules.
Would combining your pensions give you more options?
Bringing your pensions together can make planning simpler, as everything’s in one place. Combined pension savings may also open up extra options for retirement such as taking a regular income and could reduce charges.
Have you recently transferred into People’s Pension?
If you’ve recently transferred to People’s Pension, HM Revenue & Customs (HMRC) rules may mean you can’t take all your pension money if it’s less than £10,000 and held with us, if:
- it’s been less than five years since you made a transfer in, or
- it’s been less than three years since you made a transfer out.
Contact us if you think this might apply to you.
How much tax might you need to pay?
If you take all your money at once 75% of it will be taxable, and 25% will be tax free.
For example, if you take £4,000, you won’t pay tax on £1,000 of it – but the remaining £3,000 is taxable, which means you could pay tax depending on your other income. You could pay around £600 in tax if the £3,000 is taxed at the basic rate of 20%, leaving you with about £3,400 instead of £4,000. The exact amount depends on your other income and tax code.
The rules are different depending on whether you take out less than £10,000 or more than £10,000:
- If you take all your pension money and it’s less than £10,000, you might hear this described as a ‘small pot lump sum’.
- If you take more than £10,000, this is sometimes called a ‘uncrystallised funds pension lump sum (UFPLS)’. Taking more than £10,000 in one go could affect the tax you pay now and limit how much you can save into your pension and receive tax relief in the future.
A large withdrawal in a single tax year could also affect the tax you pay, as it may push you into a higher tax band. It could also impact any government benefits you receive, such as support for living costs, housing or your other needs.
Read more about how tax works when you take your pension money and what to look out for.
Is taking all your pension money at once right for you?
It’s a big decision, so it’s worth taking your time to explore your options.
How to take your pension money
You can go through the process in your online account. It takes about 15 minutes to complete.
We'll need to know:
- Details of any other pensions you’ve taken money from, and how much.
- Information about any means-tested benefits you receive.
- Whether you’ve registered for lifetime allowance protection.
- Your bank account details.
When you want to take money from your pension, we may need to carry out a few extra checks to keep your savings safe. This can include confirming your identity electronically or asking for supporting information. These steps help protect you from fraud, and having your details ready can save you time.
