For many people, reaching the age where they can access their pension feels like a significant milestone.
After years of paying into it, it’s natural to start wondering whether now is the right time to take some money out. You may be thinking about reducing your working hours, paying off your mortgage, helping your children financially, or simply enjoying the retirement you’ve spent years saving for.
The important thing to remember is that being able to access your pension doesn’t mean you have to.
In fact, one of the biggest financial decisions isn’t when you can access your pension – it’s how you choose to use it.
When can I access my pension?
For most people, the earliest age you can currently access a defined contribution pension is 55. However, this is due to increase to 57 from 6 April 2028, unless you have a protected pension age under your scheme’s rules. The Government explains the current rules in its guidance on accessing your pension.
Reaching this age simply gives you more options. It doesn’t mean you have to stop working or start drawing your pension immediately.
What are my options?
There isn’t a single “right” way to access your pension. The most suitable approach will depend on your wider financial circumstances, your retirement plans and how much flexibility you want.
| Option | May suit people who… | Considerations |
| Leave it invested | Don’t currently need the money | Gives your pension more time to potentially grow, but its value can still rise and fall. |
| Take tax-free cash | Need a lump sum for a specific purpose | Usually up to 25% can be taken tax free (subject to the relevant rules and allowances), but you’ll have less left invested for the future. |
| Flexible drawdown | Want flexibility over how much and when you withdraw | Lets you vary your income, but withdrawals and investment performance will affect how long your pension lasts. |
| Buy an annuity | Want a guaranteed income | Provides certainty for life, but offers less flexibility and is usually irreversible. |
| Use a combination | Want to balance flexibility and certainty | Many people combine different options to suit their retirement goals. |
For a useful overview of the different ways to take your pension, MoneyHelper’s pension options guide explains each option in more detail.
Do I have to take my pension as soon as I can?
No. In fact, many people choose not to access their pension straight away.
Some are still working and don’t yet need the income. Others want to leave the pension invested for longer, allowing it more time to potentially grow before they start drawing from it.
Equally, taking money earlier than necessary could have tax implications or reduce the amount available later in retirement.
Just because you can access your pension doesn’t necessarily mean it’s the right time to do so.
Should I take my tax-free cash straight away?
This is one of the most common questions we hear.
While many pensions allow you to take up to 25% of your pot tax free (subject to the relevant rules and allowances), that doesn’t automatically mean you should.
Some people use the money to:
- Repay a mortgage
- Make home improvements
- Help children or grandchildren financially
- Build up cash reserves
- Reduce borrowing
Others decide to leave it where it is because they don’t currently need the money or because taking it later may fit better with their wider financial plans.
Like most retirement decisions, it’s less about what you’re allowed to do and more about what makes sense for your circumstances.
What about tax?
Although part of your pension may be available tax free, the remainder is generally taxed as income when you withdraw it.
That means taking a large lump sum in a single tax year could move you into a higher rate of income tax than you were expecting.
Understanding how withdrawals fit alongside your salary, other pensions and investment income can often make a significant difference to the amount of tax you ultimately pay.
The Government provides further information on how pension withdrawals are taxed.
Why it’s worth slowing down
Accessing your pension isn’t simply about taking money out of an account.
The decisions you make could influence:
- How long your pension lasts
- Your future retirement income
- Your tax position
- Your inheritance plans
- How much flexibility you have later in life
For many people, this is one of the first major decisions of retirement rather than the last.
Taking a little more time to understand the options can often lead to better long-term outcomes than making decisions based purely on what’s available today.
Porta’s Take
One thing we often notice is that people treat pension access like a deadline. They assume that once they reach the age they can access their pension, they need to decide everything at once – whether to retire, whether to take their tax-free cash, how much income they’ll need and how they’ll invest the rest.
In reality, those are often separate decisions that can happen over a number of years. You might continue working while leaving your pension untouched. You might take some tax-free cash but leave the rest invested.
Or you might start taking a small income now and review it again in a year’s time.
In our experience, people often feel much less overwhelmed once they realise they don’t have to map out the next 30 years of retirement in a single conversation.
The goal isn’t to make every decision as soon as your pension becomes accessible. It’s to make the right decisions at the right time, as your retirement unfolds.
If you’d like to explore which options are right for you, we’re always happy to talk it through.
Important information
This article provides general information only and does not constitute personal financial advice. The information is based on our understanding of current regulations, which may change in future. Decisions about your finances should always be made based on your individual circumstances. If you’re unsure about the suitability of any course of action, you should seek regulated financial advice.
The Financial Conduct Authority does not regulate tax planning, estate planning, trusts or wills.
The value of your investments can go down as well as up, so you could get back less than you invested.
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