Swapping some income for cash

When you start taking your pension, you can usually choose to swap some of your pension for a tax-free cash lump sum, up to a maximum amount.

The maximum amount you can take depends on the level of your pension and your age at the time. We work out this amount using a formula set by HM Revenue & Customs. In some circumstances, the amount may be restricted to make sure that you still get a certain level of pension. We’ll tell you if this applies to you.

Taking a lump sum reduces your pension. The amount of the reduction depends on your age at retirement, the value of the lump sum itself and vary with regard to financial market conditions at the time of calculation.

If you do swap some of your pension for a lump sum, it does not affect the amount of pension we pay to your spouse or civil partner.

You may wish to take independent financial advice before deciding how much lump sum to take. You can find an independent financial adviser in your area by going to www.unbiased.co.uk. You will probably have to pay for their advice.

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