what your pension can do for you

As you approach your retirement you will rightly be asking what your pension savings can do for you.

One thing is for certain, there are lots of choices to be made and the answers to these questions are different for everyone.

If you’re looking for more information right now then please read on. These are some of the facts we take into account when developing a personal plan for you.

Click on the questions to find our reply…

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What happens now?

Each of your pensions will be set up with a selected retirement age. This may be the age you are now when you’re thinking of accessing your savings, or it may not. You will need to check with each provider to find out if you have any flexibility to change the age you take the pension, to take it either earlier or later than the age they hold for you. You then need to let each provider know when to start paying your pension to you.

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are.

How do I juggle so many pensions? Receiving a regular pension income must be easier than this!

Over a working life it’s very likely you have collected a few different pensions. Each of these will pay you a pension which can result in receiving lots of payments throughout a month. If you would find it easier to receive fewer payments we can assess your situation..

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are. We can help explore the best option for you, taking into account all the different features your existing pensions will have.

Should I take my tax free cash out of my pension? It is after all my money

If you have a defined benefit pension through your current or old employer then you need to follow the rules of that scheme which will state when you can start accessing that pension.

For most other pension plans you can start accessing your pension funds from age 55 (rising to 57 from 2028), either for the tax-free cash, an income, or both, all without needing to retire.

You can start taking a pension income, although this generally isn’t sensible if you don’t need the additional income and have other income, as you do pay income tax on pension income.

Whilst it is your money, taking tax-free cash from your pension is a significant decision and should be considered carefully. Since the abolition of the Lifetime Allowance, the amount of tax-free cash you can take is now governed by the Lump Sum Allowance (LSA), which is currently capped at £268,275.
Taking tax-free cash earlier than needed may not always be in your best interests. Funds remaining within your pension can continue to benefit from tax-efficient growth and may also form part of your broader retirement and estate planning strategy. The right approach will depend on your income needs, tax position, and long-term objectives.

When you make a decision to do this you need to think of this as taking money from probably the most tax-efficient account you have. Could you leave this money in the pension and use any other savings you have instead? And it doesn’t make sense to take it just to put it into another savings account, where it will start to be taxed.

It will always be there for you, and remember if your pension investment grew then in future you will still be able to take 25% of a bigger pot. However, remember if your investment was to fall the amount of the lump sum will be smaller.

At Sapphire Financial Planning we can give you a personal plan explaining what your options are and what is best for you.

We can advise you on whether this is the best option for you. Remember if you withdraw money there will be less left to provide you with an income when you need it. You will also be withdrawing money from the best tax efficient account you probably have.
Will my pension savings give me enough income?

The clearly depends on the amount of savings in your pension fund and how much income you realistically feel you need. At a time of flexible pensions you can even draw money straight from the fund to spend, but you can imagine the value of your pensions savings dramatically reducing each month, with the real risk one day there could be nothing left.

So the question is also, will my pension savings last for as long as I need them to?

At Sapphire Financial Planning we can help you balance what is important to you, sufficient income for now and the future, with the level of certainty it could be maintained that you feel comfortable with, and also taking into account any need your family may have for the pension income if you were to die.

We will recommend the best option for you, giving you peace of mind when making a most important decision at the start of your retirement.

Can I choose how much income I want?

Some pension plans are more flexible than others. You may find some company pensions don’t let you choose. With other pension plans it depends on the income option you now take.

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are.

I’ve reached the retirement age on my pension savings, do I need to take it now?

Not necessarily. Each of your pension plans will be set up with a selected retirement age. This may be the age you are now, when you’re thinking of accessing your savings, or it may not. You will need to check with each provider to find out if you have any flexibility to change the age you take the pension, to take it either earlier or later than the age they hold for you. You then need to let each provider know when to start paying your pension to you.

At Sapphire Financial Planning we can help you understand the paperwork you have for your plans and what your options are.

Should I take money out of my pension savings this tax year, or wait until April next year?

Income tax is payable on pension income in the same way as earned income. You still benefit from a personal allowance, currently £12,570, before income tax becomes payable. This threshold is frozen until April 2031.

At Sapphire Financial Planning we look at all your options and advise you on your personal circumstance. This includes looking at what income you’re already received in the tax year and what other savings you may have, all to help you retain more of your savings for you, reducing tax payable to the taxman.

I’ve got other savings and ISAs, how can these help me enjoy the lifestyle I want
Your pension is typically one of the most tax-efficient savings vehicles available and should be considered alongside your wider assets.
Where you have additional savings, it can often be beneficial to utilise these first to support your income needs. Withdrawals from ISAs are free from income tax, dividend tax, and capital gains tax, making them a highly flexible and efficient source of income.
With upcoming changes bringing pensions into the scope of inheritance tax from April 2027, the strategy around which assets to draw from first becomes increasingly important. A balanced approach is required, considering both your immediate income needs and the long-term impact on your estate.
Careful planning allows you to structure withdrawals across pensions, ISAs, and other investments in a way that supports your lifestyle while managing tax exposure over time.

At Sapphire Financial Planning, we can provide a personalised strategy aligned to your circumstances and objectives.

What about HMRC?
Tax is an unavoidable consideration; however, with careful planning, its impact can be managed effectively. Your pension offers flexibility in how and when you access funds, helping you manage income tax efficiently and plan for inheritance tax.
Personal pension contributions reduce your adjusted net income by the gross contribution amount. This can help preserve or reinstate your personal allowance and reduce your overall income tax liability.
From April 2027, pension funds will be included within your estate for inheritance tax purposes.
As such, pensions should now be considered as part of a holistic estate planning strategy, alongside other assets.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief generally depends on individual circumstances.

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