Your options (defined-contribution pot)
Once you reach the minimum age, you can usually mix and match these — you don’t have to do it all at once:
| Option | What it is |
|---|
| Take cash | Take the whole pot or chunks. Usually 25% of each chunk is tax-free, the rest taxed. Flexible, but a big withdrawal can mean a big tax bill. |
| Flexi-access drawdown | Leave the pot invested and take an adjustable income. It can keep growing — but it can also fall, and you carry the risk of running out. |
| Annuity | Use the pot to buy a guaranteed income for life. Secure, but usually can’t be changed once bought — shop around for the best rate. |
| A mix / leave it | Combine the above at different times, or leave it invested for now. You don’t have to decide everything on day one. |
Use the free guidance first — it’s genuinely good
Pension Wise (from MoneyHelper) gives free, impartial, government-backed guidance on your options for a defined-contribution pension from age 50. Book a free appointment before you make any move — it can save you thousands and is not a sales pitch.
The emergency-tax trap — and how to reclaim it
When you first take a flexible lump sum, HMRC often applies an emergency “Month 1” tax code that treats your one-off payment as if you’ll receive it every month — so it can overtax you heavily. It usually corrects itself over time, but you don’t have to wait:
- P55 — if you’ve taken part of your pot and aren’t taking regular payments.
- P53Z — if you’ve taken your whole pot and are still working/receiving other income.
- P50Z — if you’ve taken your whole pot and have no other income.
You can claim back the overpayment in-year with the right form on GOV.UK — refunds are typically paid within weeks. See our tax refund guide.
Do this now
- Book free Pension Wise / MoneyHelper guidance before you take anything.
- Plan the tax — spread withdrawals across tax years where you can, and check the benefits/MPAA impact.
- If you’re overtaxed on a withdrawal, reclaim it with HMRC form P55 / P53Z / P50Z — don’t just wait.
Free help: Pension Wise / MoneyHelper · Citizens Advice 0800 144 8848. SortedUK is not FCA-regulated — this is general information, not financial advice; take regulated advice for big decisions.
Source verification
Primary sources: GOV.UK (Tax when you get a pension; P55/P53Z/P50Z reclaim forms; personal pensions — how you can take your pension) and MoneyHelper (lump sum allowances; drawdown; annuities; Pension Wise). Last verified 21 June 2026. Confidence: High — the normal minimum pension age is 55 (57 from April 2028); up to 25% is usually tax-free subject to the £268,275 lump sum allowance, with the rest taxed as income; emergency tax commonly applies to first flexible withdrawals and is reclaimable via P55/P53Z/P50Z; the options are cash, flexi-access drawdown, annuity or a mix; and flexibly accessing taxable income triggers the Money Purchase Annual Allowance. SortedUK is independent and not FCA-regulated — this is general information, not financial advice. Use Pension Wise and take regulated advice for your own decision.
Taking your pension — common questions
Is the 25% tax-free lump sum changing?
As of this guide, you can still take up to 25% tax-free, subject to the £268,275 lump sum allowance. Rumours circulate at most Budgets — check MoneyHelper for the current position before acting, and don’t rush a decision based on speculation.
Why did I pay so much tax on my first withdrawal?
Almost certainly emergency tax — HMRC’s Month 1 code treats a one-off payment as monthly income. Reclaim it with form P55, P53Z or P50Z depending on your circumstances; you don’t have to wait for it to correct itself.
Should I take cash, drawdown or an annuity?
It depends on your needs, other income, health and attitude to risk — there’s no one right answer. Use free Pension Wise guidance to compare, and consider regulated financial advice for a large pot or a defined-benefit (final salary) transfer.
Could taking my pension affect my benefits?
Yes — cash you take and hold can count as savings for means-tested benefits, and taxable withdrawals add to your income. Check the impact before drawing a large sum, especially if you receive Universal Credit, Pension Credit or Council Tax Reduction.