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Fully cashing in your pension pot? Wait!

New pension rules introduced in April 2015 offer you more flexibility with your pension pot than ever before. Among your options, you can now choose to take small cash sums from your pot when you want them, or take all your pot as cash in one go.

Figures from the Financial Conduct Authority (FCA) reveal 68% of pensions taken out between July-September 2015 were cashed in full. This is the equivalent of just over 120,000 pension schemes. A further 58,000 were used to take an income after taking the tax free cash sum.

Although it’s not possible to know what percentage of these cashed in pension schemes represented the only private pension held by these individuals, it’s still a potentially worrying stat. If it is their only pot, what will there be left when they do come to retire?

We asked our pensions expert, Teresa Fritz, for the things to think about with your pension pot.

Your pension pot – what to consider

Before you decide what to do with your pension pot, take some time to do some research and get the help you need. 

If you are eligible for an appointment with a Pension Wise adviser then take it.  Pension Wise is a government service set up to help you with your choices at retirement.

An appointment won’t cost you anything (unless you count the cost of a phone call or the bus/petrol to the nearest office) and you will have someone to help you go through the pros and cons of each option.

If you prefer to do some research yourself before (or after) your Pension Wise session then we can help.

With the Retirement Income Options tool you can go step by step through all your options  - or just dip in and out – it’s your choice. But you can do it in your own time and it will help you to understand what taking a specific course of action might mean to you in the long term.

Most of the options available under the new pension freedoms aren’t straightforward and many people find they need further help in the form of a professional financial adviser. 

If you do need professional help use the Money Advice Service Retirement Adviser Directory to find a regulated adviser who can provide you with financial advice in the way you want it -  in person, by telephone or online.   

Regulated advice has to be paid for, but there are various ways you can pay and you don’t have to commit to anything before you know roughly how much this will cost.   Paying for professional advice can often save you a whole lot of money later on.

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  • Kevin McGregor / 24 July 2018

    I was working in inverurie hospital for 5years and I was paying every week all the time. And Im wanting to get my money I am owed

  • brian shields / 1 November 2017

    my 65th birthday falls on 23 01 54 why is my state pension starting on the 06 05 2019

  • Raymond Harris / 20 April 2016

    I have been receiving a private pension for several years now and have decided that I would like to cash this in All retirement advice is geared to pre retirement situations Is it possible to cash this pension pot in ? as it is considered a minimal pension pot under £33,000.00 I have great difficulty in finding any information with regard to the options open to me.

  • Jeanette / 8 February 2016

    I want to cash in my pension of under 12 thousand in 2020 ?

  • peter / 7 February 2016

    robert - get quotes for an enhanced annuity, it takes into account your health, both current and historical, and could make a big difference to the return on a Defined Contribution pension pot.

  • M. Gregg / 7 February 2016

    Looking at the last comment,
    Its an interesting reflection that the government seem to think everyone will live to be 150 in good health then pass on. However the reality is different in my case I had a company final salary pension that I paid into from the age of 16 for 27 years then I was made redundant. At this point I worked for 12 years at another company while I watched my fist company going to the wall and closing down, not knowing if I would ever get my pension. So after 12 years of worry I finally took a lump sum and kept some as a pension monthly income. I would have left it in and waited but the risk seemed to great even to leave the full amount in what appeared to be a dying company. At least if I loose my income pension I will have a lump sum to get some interest off. The next company made me redundant as well with just a small pension which I won't touch until 65. I would have put the lump sum into the latest job pension but the new job I have is looking at risk and I might need to live on it. Its a difficult decision do you leave it and live to get it or lose it in company closures. Even drawing a pension, the state pension may never materialise the date you can claim it seems impossible to determine. Perhaps its the Idea that "your all in" a company pension to earn just enough to not be eligible for the state one in the future. So I lost half of the pension to claim early at 55 but a least I have something to show for the years of investment. Personally I hedge my bets and have a lump sum and leave something (not enough to live on) unless the state pension appears. If you do draw a pension early at least you can look at lesser paid work and keep options open. Either way its a risk! I remember someone saying you can buy a new car now, I said you mean buy my wife an income.

  • Robert.A.Deluce / 13 January 2016

    I will reach pensionable age (65) in a few weeks. I have been paying in to a company pension scheme which offers an annuity. I have calculated that I will have to reach the age of 97 before I break even with the monthly payments they will provide. I suffer from angina, diabetes and arthritis so I don't feel 97 is likely to be realistic. Under the circumstances I am tempted to ask for a one off lump sum.