Taking tax-free cash

If you are thinking of totally withdrawing your pension fund, you might want to take into account any other earnings that you will have in the tax year, as 75% of the pension fund will be added to your earned income for tax purposes. The other 25% are tax-free as they are your tax-free cash.

Everyone has a personal tax allowance of earnings before they pay tax, which might provide a way to draw pension funds in stages over a number of years, however any tax planning should be discussed with a financial adviser or tax expert beforehand.