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Retirement Q&As

Retirement Q&As

Are you considering your retirement options?

These questions and answers have been put together to answer some general key questions related to the retirement journey.

I am approaching my selected retirement date, what will happen?

You will be sent a retirement pack which will list the options available to you. This pack will include an estimate of your pension savings value. This pack will include information on how to receive pension guidance to help you understand the pension options available to you.

My retirement date is in 6 months, what will happen?

You should receive a retirement pack from us which will outline the options available to you. This pack will include an estimate of your pension savings value. This pack will include information on how to receive pension guidance to help you understand the pension options available to you.

My retirement date is in the future, but I am over 55 and am interested in taking my pension savings early, what should I do?

If you are not near your selected retirement date, but are over 55 and wish to take your pension savings, please contact us and we will arrange for a retirement pack to be sent to you.

I am not yet aged 55. Can I now take my pension savings early?

No, you cannot normally take your pension savings from your pension fund before age 55, unless you are in ill health. Please contact us if you would like to discuss this.

What are my retirement options?

We have produced retirement option guides, which can be accessed by clicking here. These give an overview of the options available to you.

You can contact us if you would like to discuss the options available to you.

What will I need to do to decide on which retirement option is best for me?

You should read all of the information we send you. We strongly recommend you contact Pension Wise who will be able to provide free and impartial pension guidance online, face to face or over the phone. You should start to research all of the different options available to you in the market, as you may be able to access a wider range of options from different providers, and if you are interested in buying an annuity, obtain a higher pension income by shopping around.

What is Pension Wise?

Pension Wise is a new government service which offers:

  • tailored guidance (online, over the telephone or face to face) to explain what options you have and help you think about how to make the best use of your pension savings;
  • information about the tax implications of different options and other important things you should think about; and
  • tips on getting the best deal, including how to shop around.

Click here to visit the Pension Wise website.

You can call to book a Pension Wise appointment by calling 0800 138 3944 between 8am and 10pm, Monday to Sunday.

How do I get financial advice?

Please click here for information on how you can get financial advice.

If I take all of my pension savings as a cash lump sum, how will this be taxed?

If you decide to cash in your pension policy you will receive 25% tax free, and then your pension provider will apply the appropriate rate of tax based on HM Revenue & Customs (HMRC) regulations on the remaining fund. There are different regulations around how your pension provider will initially apply tax, dependent on the size of your pension savings and whether you have received cash from any other pension savings previously.

If you have a Phoenix Life Individual Pension Policy you can use our tax calculator to give you an indication of what you would receive from your policy if you were to take the entire amount as cash.

It is important to understand the amount of tax that will initially be deducted by your pension provider will not necessarily be the final amount of tax that you pay. You could have either underpaid or overpaid on your tax. Shortly after the end of the tax year, HMRC will automatically assess the tax you have paid on the lump sum along with any other sources of income you may have. They will then contact you directly regarding any under or over payment.

However, if you wish to contact HMRC before the end of the tax year to consider your tax position immediately then you need to complete a HMRC form obtained from www.gov.co.uk, this would be either a P50Z if you have no other income except state pension or P53Z if you have other sources of income.

Please be aware that by taking a cash lump sum payment this may impact your entitlement to means-tested state benefits and if you require tax guidance we recommend you contact a tax adviser.

We have created a Question & Answer document on the tax implications of taking your pension savings as cash. Please click here.

You have my current tax code, so why is this not going to be used to tax my cash lump sum payment?

Up to 25% of your cash sum payment can be taken tax free with the remainder liable to tax under the pay as you earn system (PAYE).

We will tax the remainder of your cash lump sum payment under the emergency tax rate (ER) or the basic rate tax rate (BR). This will depend on the size of your lump sum amount and whether you have received cash from any other pension savings previously.

If your fund is considered a ‘small pot’, which applies if the fund is below £10,000, then 25% of your fund will be tax free and 75% will be taxed at the basic rate (BR). (This is assuming you have not taken more than 3 ‘small pots’ previously). If your fund is not considered to be a ‘small pot’ then the lump sum will be taxed at the emergency rate (ER).

For non-small pots: Phoenix is not always able to accommodate using the existing PAYE code we hold and even where it is used, it does not always follow that less tax will be deducted rather than using the emergency tax rate, as this will depend upon the size of the payment, the timing of that payment and the existing PAYE code. Eventually the actual tax due on this payment will be settled between you and HM Revenue & Customs (HMRC).

It is important to understand that ultimately your cash lump sum will be taxed on your marginal rate however, initially you may be under or over taxed. Shortly after the end of the tax year HMRC will automatically assess the tax you have paid on the lump sum along with any other sources of income you may have. HMRC will contact you directly regarding any under or over payment.

However, if you wish to contact HMRC before the end of the tax year to consider your tax position immediately then you need to complete a HMRC form obtained from www.gov.co.uk, this would be either a P50Z if you have no other income except state pension or P53Z if you have other sources of income.

If you have a Phoenix Life Individual Pension Policy you can use our tax calculator to give you an indication of what you would receive from your policy if you were to take the entire amount as cash.

Please be aware that by taking a cash lump sum payment this may impact your entitlement to means-tested state benefits and if you require tax guidance we recommend you contact a tax adviser.

Can I still have an annuity?

Yes, you can still have a full annuity. This could be with us or with another pension provider of your choice. It’s important to remember that you don’t have to buy an annuity from us and we strongly recommend that you shop around. If you don’t shop around you may lose out on a better deal with another provider and may receive a lower income.

Shopping around will also enable you to see if your health or lifestyle makes you eligible for enhanced annuity rates. Enhanced annuity pension providers will rate certain medical and lifestyle conditions differently, so each provider may give different rates. An enhanced annuity will pay a higher income level than a standard annuity.

I have heard that I can sell my existing annuity for cash. How can I do this?

In March 2015, George Osbourne announced plans that would allow people to access their annuity (referred to as a secondary annuity market). A consultation was held and it was announced that the implementation of the secondary annuity market would be delayed until 6 April 2017. Further updates on the proposed secondary annuity market can be found in the Changes to Pension Rules section.

Need guidance or advice?

Free and impartial pension guidance service and information on obtaining financial advice

Request your retirement pack

For information on accessing your pension funds, request your personal retirement pack

Contact us

Find contact details, information about your policy or make changes online

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