Moneytree Wealth Management
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Pensions & Retirement

What do I need to know?

There’s a lot more choice nowadays about what you can do with your pension pot at retirement than ever before, so whether you’re finishing work soon or you’ve still got a long way to go before then, it’s important you know what the right thing to do is.

Most people will have paid into at least one pension scheme in their lifetime, either privately or through a workplace pension as a defined contribution or defined benefit. These work slightly differently and will give you different benefits, but as a rule, what you can do with your money when you retire is the same.

If you’ve had several jobs over your working life or your work’s changed schemes, you might have more than one pension out there. And, although you’re not contributing to these any more, you’ll still have money invested and a pot to take in the future.

It could be that keeping that investment where it is, is the best thing for you or it might be better to switch your existing scheme, or even take out another one entirely. And you can take 25% as tax-free lump sum to do whatever you like with. It doesn’t matter how much you’ve got saved – everyone gets this benefit regardless.

In some cases, you can even withdraw your whole pension pot in one go (although you’ll be taxed for anything over the first 25%). It all depends on the type of scheme you’re invested in and your individual circumstances.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Retirement freedom creates more choice, but it brings more risk.

The restrictions previously in place on pensions meant you had far less choice in the past, but they also protected us from running out of money.

We’re living longer now and spending more time in retirement. Even though the state pension has gone up for most people, what you do with your pension fund, so it meets your needs in retirement depends on making the right choices today.