Top pension tips if you're about to retire

Understanding your options and putting a plan in place.

6 min read

We spend our working lives building towards retirement. Choices we make today will have a big impact on the quality of our lives later on. If you only have a handful of years to go until you reach your retirement, it has never been more important to understand your options and put a plan in place – now could be a good time to re-evaluate your plans.

The changes made to UK pensions in 2015 mean that we all have more choices available on how to fund our lifestyle in retirement. But decisions surrounding when, why, and how you decide to retire will be very personal and will largely depend on your individual circumstances. These decisions will also be impacted by external factors such as the rising State Pension age, and the impact of the recent pandemic on the job market. When planning for your future, it’s important to know when you can access the money in your pension pot.
If your pension is not on track to give you the income you want in retirement, you need to look at how to boost it.

Taking stock of your retirement plans

Retirement is a time to reap the rewards of years of hard work and do more of the things that you love, whether that’s travelling the world or spending time with family. But to make this a reality, you need to prepare as well as you can financially. This isn’t always easy, as pensions and retirement planning can be complex.

To help you ensure you’re on the right track, ask yourself the following questions:
• What type of pension/s do I have?
• Do I have more than one pension pot? If so, where are they?
• When and how can I access the funds in my pension pots?
• What is the value of my pension pots?
• What benefits will they provide me with?
• What about any other options or guarantees?

Changes to the pension Lifetime Allowance

Prior to April 2023, if you were close to retirement, you may have found that you were approaching the Pension Lifetime Allowance (LTA) limit – that was the most you could accrue overall within your pension plans without incurring an additional tax charge on the excess funds. However, the LTA charge was abolished in April 2023 and the allowance will be removed altogether from April 2024, meaning there are no limitations on the amount that you can save within your pension plans. This will be an important area to reconsider for anyone who may have previously ceased pension contributions due to being close to their LTA.

What does your current and forecasted wealth look like?

As you get closer to retirement, it is important to assess your current and forecasted wealth, along with your income and expenditure, to create a picture of your finances for both now and in the future.

Building your individual retirement cash flow plan involves assessing your current and forecasted wealth, along with your income and expenditure, using assumed rates of investment growth, inflation and interest rates, to build a picture of your finances both now and in the future.

Time to look at your options available when accessing your pensions

Once you reach age 55 (the minimum pension age is due to increase from 55 to 57 by 2028), you can access your defined contribution (DC) pension pot (these are personal, stakeholder and most workplace pension schemes). You can take some or all of it, to use as you need, or leave it so that it has the potential to continue to grow. It’s up to you how you take the benefits from your DC pension pot. You can take your benefits in a number of different ways.

You can choose to buy a guaranteed income for life (an annuity). You can take some, or all, of your pension pot as a cash lump sum, or you can leave it invested. However, you decide to take your benefits, you’ll normally be able to take 25% of your pension pot tax-free, and the remainder will be subject to Income Tax.

It’s good to have choices when it comes to pensions and your retirement, but it’s also important to understand all your options and any impact your decision may have on your future security. How long your pension pot lasts will depend on the choices you make.


One way to use your pension pot is to buy an annuity. This gives you a regular guaranteed retirement income for the rest of your life or for a fixed term. Buying an annuity is usually an irreversible decision, so it’s crucial to consider your options, choose the right type and get the best deal you can.

There are many different options when buying an annuity, which allows you to tailor your income to suit your needs.

It's important to understand what these options are. This is so you'll know:
• When you’ll get your income.
• How much you’ll get.
• What you can protect.
• Who you can potentially provide for when you die.

There are several options to choose from:
• Single or joint life
• Nominee Annuity
• Successor’s Annuity

In addition to the various types of annuity options available to you, you will also need to consider whether you want the annuity income to remain the same or increase, and there are different options with that too.

You can read more about the different types of annuity and the options available to you at

Flexi-access drawdown

By opting for flexi-access drawdown, you can leave your pension pot invested so that it has the potential to grow or take lump sums or a regular income from it. Your pension pot will last until you’ve taken all your money out. The level of income you take, any investment growth and the impact of charges will be key factors as to how long your pension pot will last.

Take some or all of it in cash

If you take some or all of your pension pot as a cash lump sum, it’s up to you how long it lasts. Once you receive your money after tax, you’re completely responsible for it and can use it as you require –but remember that although 25% of the amount you take is tax-free, you’ll pay Income Tax on the rest.

Leave it all for now - defer your pension

You could decide not to take your pension at your selected retirement date and leave it invested until you’re ready to take your benefits. This means your pension pot would have the potential to grow, although this is not guaranteed. It’s important to ensure you don’t lose any guarantees which only apply at your retirement date if you decide to leave your pension pot.

Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The content of this article was accurate at the time of writing. Whilst information is considered to be true and correct at the date of publication, changes in circumstances, regulation and legislation after the time of publication may impact on the accuracy of the article.

The information in this article is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change and tax implications will be based on your individual circumstances.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by interest rates at the time you take your benefits.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means-tested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.

Please note, The Financial Conduct Authority does not regulate advice on taxation or lifetime cashflow planning.