Pension Withdrawal Options UK — How to Access Your Pension

When Can You Access Your Pension?

From age 55 (rising to 57 in 2028). You can access your pension whether you are still working or retired.

Your Options

Tax-Free Lump Sum

Take up to 25% of your pension pot tax-free. The rest is taxed as income.

Drawdown

Keep your pension invested and withdraw as needed. Flexible but you manage the investment risk.

Annuity

Buy a guaranteed income for life. Less flexible but removes investment risk and longevity risk.

Cash Out

Take the whole pot as cash. 25% is tax-free, the rest is taxed as income — potentially pushing you into higher tax bands.

Tax on Pension Withdrawals

After the 25% tax-free portion, withdrawals are added to your income and taxed at your marginal rate. If you withdraw a large amount in one year, you could end up paying 40% or 45% tax on some of it.