Partial lump sum

This option lets you withdraw money from your pension pot in one or more lump sums.

How it works

You can take some of your pension pot as a cash lump sum, then leave the remaining fund invested until you need it.

After that, you can take further lump sums or convert parts of the remaining funds into a retirement income until you've used all the funds in the plan. Both options would allow you take 25% of the amount being withdrawn as a tax-free lump sum.

Please bear in mind that the main purpose of your pension pot is to secure your financial future for the rest of your life. Unless you budget accordingly, or have other investments to give you an income, there's a risk that your lump sum may run out before the end of your lifetime.

It's also worth considering whether a partial lump sum is the most tax-efficient way of taking your pension. Although 25% of the cash lump sum is tax free, any balance is taxed as income which may put you in a higher tax bracket, especially if you take it all in the one tax year. Read How will you be taxed? to see more information on how this works.

This information is based on our understanding of current taxation law and HMRC practice, which may change.

Partial lump sums:

Give you the money in your bank account to spend or reinvest
Don't guarantee an income for life
Don't offer the guarantee of a death benefit
The tax-free amount is deducted from both your lump sum allowance and lump sum and death benefit allowance, reducing the amount you can take without incurring a tax charge.
Trigger a reduction in the amount you can pay each year into money purchase pensions without incurring a tax charge (in the current tax year, the amount is £10,000).

Things you should think about before taking a partial lump sum

You'll have to decide when and how you take your pension benefits.
You should consider how much you will need if you want to convert the remaining fund into a retirement income.
You should take time to understand whether taking a lump sum may put you in a higher income tax bracket.
You should consider whether you have a partner or dependants that rely on you financially.

The value of an investment, and any income from it, can fall as well as rise and isn’t guaranteed. You could get back less than you originally invested.

Is taking a partial lump sum right for you?

Create an income plan for retirement

Find out which retirement option best suits your circumstances and fits with your goals. Use our interactive tool to view, combine and adjust your options.

Launch the Retirement Income Planner(Opens in a new layer)

Get help and guidance

Make it happen

Your Retirement Planner

Get prepared

Understand your options