Using my pension money

Using your pension money now could help your finances, but also affect your future.

Freedom to choose

From the age of 55, you have the freedom to use your pension money. You can take the first 25% tax-free and the rest will count as part of your annual income, taxed at your marginal rate. So, what are your options?

Withdraw all your pension money

Take money whenever you need to

Buy an income for life

Leave your money where it is

You can also mix and match to suit you

Things to think about

Using your pension money will leave less money in your pension, and will have an impact on:

  • The money you’ll have in retirement. Anything you use now will mean less, or even nothing at all, is left in your pension.
  • The value of your investments. If you choose to only withdraw some of your money, what’s left will remain invested, and could go down as well as up in value.
  • The access you have to your money. Once you buy an income for life you can’t generally change it or cash it in, even if your personal circumstances change.
  • The inheritance you can pass on. This depends on what you decide to do with your pension money. Find out more

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The Aviva Pension

A flexible way to save for your retirement. It’s an individual, self-invested pension, so you control where your money goes.

Income Drawdown

Use as much or as little of your pension money as you want, whenever you want from age 55.


Receive a guaranteed income for life when you retire.

Learn more about retirement

Important information about this video

The information contained within the videos on the Investment and Retirement site was, to the best of our knowledge and belief, correct at the time of filming and unless otherwise stated, relates to the 2016/2017 tax year. Tax rules may change in the future. These videos should not be used as a substitute for financial advice and the content may not apply to your personal circumstances. If you are not sure whether this product is right for you, you should seek financial advice. If you do not currently have a financial adviser you can find one at

How do I take money from my pension fund?

Video transcript

From April 2015, savers will have complete freedom to access their pension funds. If you’re 55 or older, you’ll have four choices:

  • One - withdraw all your pension money immediately
  • Two - take some of the money, as and when you need it
  • Three - use it to buy yourself an income for your lifetime
  • Or four simply leave the money where it is. You can make your choices later.

Tax treatment will depend on your personal circumstances and tax rules may change in the future

You’ve got to think about the taxman too. You can usually take 25% of your pension fund tax free. The rest will count as part of your annual income, which you’ll be taxed on at your marginal rate.

As tempting as it might be to withdraw all of your pension fund now, you need to think carefully about how much you’ll need to live on as it may need to last you the rest of your retirement. Once you’ve made a decision, you may have to stick with it.

But that doesn’t have to mean you take nothing from your fund. You might want to take some cash to do some home improvements, or take a holiday.

Or you might find you could save money by taking a cash lump sum to put towards paying off any debts. Remember, any money left in your pension will remain invested and the value could go down as well as up, and you may get back less than has been paid in.

Whatever you decide to do, it’s worth giving some thought to your plans for your pension fund right now.

Otherwise, when the time comes to finally put your retirement plans into action, the wheels might come off.

  • Pension Wise is a free and impartial service set up by the government for people retiring with defined contribution pensions. It will help you understand what your choices are and how they work.
  • You can receive Pension Wise guidance online, over the phone or face to face. Visit for details.
  • We recommend you seek appropriate guidance or advice to understand your options at retirement.

Trace your lost pensions

Video transcript

These days, people change jobs frequently.

As a result, they may have pensions that they’ve forgotten about or have lost the paperwork for.

Don’t worry if this sounds like you, because you can get free help from the Government’s ‘Find Pension Contact Details’ webpage.

Just go to

(Web address moves to bottom of the screen and stay son screen through the duration of the video)

And contact the Pension Tracing Service. Their details can be found on our pension tracing page.

You’ll just need to know the type of pension you’re looking for, whether it be a;

  • A workplace pension
  • A personal pension
  • Or a civil service, NHS, teacher or armed forces pension.

You’ll also need to know the employer’s name.

The Pension Tracing Service will then give you the details you’ll need to contact your pension scheme provider.

To help your pension provider when you contact them, please have to hand your full name, home address and any other contact information, like phone number or email.

It’s that simple!

Income drawdown

Video transcript

If you’re 55 or over, you can take your pension fund as a cash lump sum.

Of course, it’s hard to imagine how your income needs might change as time goes by…

There will be times when you’ll want to spend more.

And there’ll be others where you’re happy to spend less.

So one of the options you could consider is simply taking some of your money as and when you need it. This is called income drawdown.

You can change the amount of income you take at any time, as often as you like, and you won’t be committed to withdrawing regular amounts.

But remember, you’ll need to think about the tax implications.

You should also consider whether the amount of income you're taking will affect any means-tested benefits you may be receiving.

At no point will you have to take out money if you don’t want to.

There are no limits on how much you can withdraw, so you could carry on doing this until your fund runs out. This means you’ll need to be careful that you leave enough money for the rest of your retirement.

Whenever you take out money, the remainder of your fund remains invested, so it still has the potential to grow or go down in value.

Don’t forget, you’ll pay charges on the money you’ve invested, so you need to take these into account too.

You should always shop around so you can find an income drawdown provider that you’re happy with and keep a close eye on the performance of your investments.

So, that’s income drawdown – a way of taking your money a little at a time. A bit like the old saying ‘You don’t have to buy the whole pig just to get a sausage.’

On Screen wording:

  • Pension Wise is a free and impartial service set up by the government for people retiring with defined contribution pensions. It will help you understand what your choices are and how they work.
  • You can receive Pension Wise guidance online, over the phone or face to face. Visit for details.
  • If you’re not sure about your options at retirement you should seek appropriate guidance or advice.

Final screen:


For more information visit

Annuities explained

Video transcript

VO: So, you want to know more about annuities, right?

An annuity offers you the opportunity to guarantee an income for life. Usually, you use money from your pension pot though you don’t have to use all of it and it doesn’t have to be bought at the start of your retirement. Once your annuity is set up, you receive a payment from it at regular intervals.

The size of your payments will depend on things like your age, any medical conditions and, of course, how much money you used to buy it.

What makes an annuity different from other options is the fact that you can rely on receiving an income from it for the rest of your life.

…no matter how long you live!

You can’t run out of money, although you need to bear in mind that inflation will reduce what you can buy with your income. And you need to know that you can’t normally change your annuity once you’ve bought it, or take flexible withdrawals.

But before your income is set in stone, you’ll have some decisions to make.

First of all, think about the provider. We’d recommend that you shop around to find the right rate for you– you don’t have to buy an annuity from the same provider you chose for your pension plan.

At the time you set up your annuity, you’ll have the option to nominate a dependent to continue to receive income after you die. This might be the same amount you receive, or a proportion of it.

You can also choose to protect your fund…

So that if you die early, a lump sum can be paid to your dependents or estate.

You also have the option to have your income increase each year, to help account for inflation. If you choose this option your income will be lower at first.

Or you might choose an annuity with a fixed minimum amount, topped up with an amount that could vary according to the performance of investments.

One last thing to bear in mind…

If you do choose an annuity, don’t be afraid to mention any medical conditions you or your spouse may have, or may have had in the past. Some conditions – and some lifestyle factors such as smoking or your weight – may mean you’re eligible to receive a higher income from your annuity.

So that’s the basics. To find out more, take a look at Annuities explained on our website.

Living longer in retirement

Video transcript

Hello. There’s someone you really should meet…

You’ll need this.

This is Future You.

The first thing to note about Future You is that, happily,he’s still here.

Did you know that 4 out of 5 people underestimatetheir life expectancy?

Some people find retirement is better for them than they thought.

For instance, youcould have a lot less stress in your everyday life.

And more time to look after yourself.

More time for other things too…

Like thinking carefully about your options for accessing your pension fund and how long your money might need to last.

Of course, you don’t have to wait until you’re retired to do some thinking on that subject…

Be seeing you later then…

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