Unlocking your pension's potential

Taking some or all of your pot can feel like a reward for decades of hard work. But without careful financial planning it can have big tax implications and also affect any benefits you’re getting. You might end up with a smaller retirement income or find care costs harder to meet.

Our recent research showed that just over half of people accessed their pots without any guidance or advice. We've gathered some tools and resources to give you that kind of help, whether you’re taking your tax-free lump sum or setting up your ongoing retirement income. 

It’s a good starting point for understanding the tax implications of taking money out of your pot. 

We also recommend seeking advice or guidance to understand your options before accessing your retirement savings. If you're over 50 you can get free guidance from Pension Wise, an impartial government service. 

Research was carried out by Opinium on 3,000 people from 3 - 9 December 2024.

The 'Lottery Effect' can hit pension savers as they turn 55 and start accessing cash lump sums from their pensions without making or acting on long-term savings plans. Clinical Psychologist Dr Emma Hepburn told us:

“Another factor feeding into decision making may be a cognitive bias known as hyperbolic discounting, which is our inclination to choose immediate gratification over rewards that come in the future, even when those things in the long term may be more beneficial for us.

“These choices are often between tangible things in the present which we are more likely to perceive the benefit of and therefore opt for, compared to future abstract things which require our imagination and feel less within reach.

“Perceptions of risk also often come into decision making, and we tend to favour decisions that feel more certain. As a result, we can feel that having or using money in the here and now is less risky than waiting to access it, even though this may actually create more risk for our future selves.”