What do I need to think about?

Do you need the money now?

It’s a good idea to only take cash if you need it. Any money removed from your pot won’t have the same tax advantages, so if you have money in other investments you could consider using that first. The more you take now, the less you’ll have in the future.

Watch your withdrawal doesn’t take you into the next tax band

Once you go over your tax-free cash limit, you’ll pay Income Tax on the rest. You could end up paying more if your withdrawal added to any other income in that tax year takes you into a higher rate tax band. You may pay less tax if you spread out your cash withdrawals and keep below higher rate bands.

Payments into any pension could be restricted

Taking out more than your tax-free cash limit (when you start accessing taxable income) restricts the payments you or an employer can make to any of your pensions, normally to £10,000 a year. This can be a problem if you’re still earning and either have other savings you want to pay into a pension or if you intend to make significant payments into any of your pensions.

State benefits

Your entitlement to means-tested state benefits, if applicable, may be affected if you take cash or income from your pension – check this isn’t going to be a problem before going ahead.