Pension Wise is a free government service that was launched in 2015 to help provide individuals with general pension advice. However, the service does not answer specific questions relating to your pension. The main advice the service provides is generic and covers what you can do with your pension pot, the different pension types, how they work and what’s tax-free and what’s not.
The website lists the following six options:
- Leave your whole pot untouched - You don’t have to start taking money from your pension pot when you reach your ‘selected retirement age’. You can leave your money invested in your pot until you need it.
- Guaranteed income (annuity) - You use your pot to buy an insurance policy that guarantees you an income for the rest of your life – no matter how long you live.
- Adjustable income - Your pot is invested to give you a regular income. You decide how much to take out and when, and how long you want it to last.
- Take cash in chunks - You can take smaller sums of money from your pot until you run out.
- Take your whole pot in one go - You can cash in your entire pot.
- Mix your options - You can mix different options. Usually, you would need a bigger pot to do this.
We would like to remind our readers that you can usually take 25% of your pension pot as a one-off lump sum without paying tax, but the remaining 75% is subject to Income Tax. Aside from the special tax-free benefits, pension income is treated as earned income for Income Tax purposes.