Can I cash in my pension?

Yes, you can cash in your pension pot, either by taking the whole amount as a single lump sum or by withdrawing smaller amounts whenever you need them.

Understanding Your Options for Cashing In Your Pension

When it comes to your pension pot, you have the flexibility to access your funds directly. This means you are not limited to just taking a regular income from it.

• Take your whole pension pot: You have the option to withdraw your entire pension savings as a single cash lump sum, regardless of its total value.
• Take smaller sums: Alternatively, you can choose to take out smaller amounts of cash from your pension whenever it suits your financial needs.

Tax Implications of Cashing Out

While you can access your pension funds as cash, it's important to understand the tax implications, as a portion of it will be tax-free, and the rest will be subject to income tax.

The rules are straightforward:

• 25% Tax-Free: A quarter (25%) of your total pension pot will be completely tax-free.
• Taxed as Income: The remaining 75% of your pension pot will be treated as income and will be subject to income tax, just like your earnings from employment or self-employment. This means the amount of tax you pay will depend on your individual tax band in the year you make the withdrawal.

Here's a simple breakdown:

For more detailed information on what you can do with your pension pot, including various options and considerations, you can refer to reliable sources like the Citizens Advice website.