Take all of it at once

Withdraw your full value where 25% is tax-free and the rest is taxable.

How it works

Take all the money in your pension as a cash lump sum. Up to 25% will be tax-free and the rest will be taxed as income. This is sometimes called a ‘full pension encashment’ or ‘uncrystallised funds pension lump sum’.

Benefits

  • Take everything all at once
    You’ll get all of your savings in one cash lump sum.
  • Extra cash for you
    Receive extra money if you have a main source of income for your retirement elsewhere.
  • More than one small pot
    Withdraw from up to 3 pots of £10,000 or less without limiting your future pension contributions.

Limitations

  • Potentially nothing left
    If you spend everything, your only source of income may be the State Pension.
  • Can’t reverse your decision
    After you decide to take money from your pension this way, you can’t change your mind and reverse the decision.
  • Contribution restrictions
    The amount you can add to other pensions will be limited. This does not apply to small pots.

Is it right for you?

This option is good for people who:

  • Want to take everything in their pension in one go.
  • Already have a source of income to support them in retirement.
  • Have a pension pot with a value less than £10,000.

Things to think about:

  • If you withdraw all your money from your pension, you might need another source of regular income.
  • This means you could end up relying on your State Pension for the rest of your retirement.
  • If you normally receive state-paid benefits, taking all your pension savings at once can affect the amounts that you get.
  • Could you combine your pensions, instead? It could give you more income to support your retirement.

Pensions under £10,000

If your pension value is less than £10,000, you can ask to take it all in one go as a 'small pot payment'.

You’ll get 25% tax-free, then we’ll deduct tax at 20% on the rest. You might need to contact HMRC to claim a refund or pay any tax due.

‘Small pot payments’ don’t count against your tax-free Lump Sum Allowance, and they don’t affect how much you can contribute to other pensions.

You can only take up to 3 payments like this in your lifetime from personal pensions. There's no limit for occupational pensions.

What else should you know?

How your pension is taxed

For pensions over £10,000, you can take up to 25% of it tax-free, then the rest is taxed as income.

We'll deduct tax using an 'emergency tax code'. This means you might pay more or less tax than you owe, so you'll need to contact HMRC toclaim any refund or pay any tax due.

Keep in mind, if you take all your savings at once, you may end up in a higher tax bracket for that year.

The maximum tax-free amount you can take across all your pensions is £268,275. This is called the Lump Sum Allowance.

Your tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future. If you're unsure, please get in touch with HMRC or a tax adviser.

Future pension contributions

Unless you’re taking a ‘small pot payment’ of £10,000 or less, taking cash this way will trigger a limit on how much you can contribute to your pensions. This is called the Money Purchase Annual Allowance.

This means that there would be a tax charge if you contributed more than £10,000 to your pension in a year. Normally you can contribute up to £60,000 before there’s a tax charge.

What happens when you die

Money left in your pension after you die will be passed on to your chosen beneficiaries.

Right now, there's usually no inheritance tax to pay on pensions. And if you die before age 75, your beneficiaries may be able to withdraw the money tax-free.

But from April 2027, the rules are changing and any money left in your pension when you die may be subject to inheritance tax.

There will be some exceptions, so you should check with HMRC to be sure.

Explore other pension options

Access your money flexibly

Get 25% tax-free cash and keep the rest invested to use as an income.

Explore flexible access

Take some of it as a lump sum

Receive a taxable sum where 25% is tax-free.

Explore taking some

Take a guaranteed income

Get tax-free cash and a secure income for life.

Explore guaranteed income

Leave it for now

Continue to save and make a decision later.

Explore leaving it