How much tax-free cash can I take from my pension at 57?

Full answer

The normal minimum pension age is currently 55 but rises to 57 from April 2028, so taking benefits at 57 will be the standard earliest access point for most people. At that age you can usually take 25% of a defined contribution pension as tax-free cash, formally the pension commencement lump sum. On a £200,000 pot that is £50,000 tax-free; on a £400,000 pot it is £100,000. The tax-free amount across all your pensions is capped by the Lump Sum Allowance of £268,275 for 2026/27, so only very large pots are restricted. The remaining 75% can be left invested in drawdown, taken as income, or used to buy an annuity, and that part is taxed as income at your marginal rate. You can phase your withdrawals: each time you crystallise a portion, a quarter of it is tax-free and the rest is taxable. Taking too much taxable income in one tax year can push you into a higher band, so spreading income helps. Drawing any taxable income beyond the tax-free cash through flexi-access drawdown triggers the Money Purchase Annual Allowance, capping future contributions at £10,000 a year. Some older schemes have a protected pension age that may let you access funds earlier, and defined benefit schemes work out tax-free cash using a commutation factor instead of a flat 25%. Check your scheme rules before drawing. Use the Pension Lump Sum calculator to see your tax-free cash and the tax on the remainder.

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More answers

• How much tax-free cash can I take from my pension?
• Can I draw my pension at 55?