Risk & Warnings

You can take all your pension savings as a one-off cash lump sum.  Usually a quarter (25%) of this will be tax free (up to a limit of £268,275), and you’ll pay income tax on the other 75%.

Once you take your one-off cash lump sum, you won’t be entitled to any more benefits from the plan.

If you’re considering this option, you should think about how to use the money to provide an income throughout your retirement rather than spending it all at once as a lump sum will not give you a regular income.

There may be tax implications if you take your pension savings as a one-off lump sum. You will need to consider your own personal tax circumstances and whether taking a taxable lump sum may mean you have to pay a higher rate of tax than normal.

If you plan to take the cash to invest somewhere else, check what the charges are before you cash in your pension.  

Also, remember that taking your pension as cash lump sum may affect whether you can receive means-tested benefits. It can also affect people in debt, especially those who have payment arrangements with their creditors. If you’re concerned about either of these things, you can contact the Citizen’s Advice Bureau or MoneyHelper.

You can keep your pension pot and make lump sum withdrawals directly from it, a bit at a time until your money runs out or you choose another option. You can decide when and how much to take out. Each time you withdraw money, 25% will be tax free and you’ll pay income tax on the other 75%.

The rest of your savings will stay in your pension pot and will continue to have the same investment choices as now. Your pension pot can go up or down in value, and if you choose this option, it’s important to keep an eye on how your money is invested to ensure it continues to suit your needs.

You can change your investments at any time and there’s no limit on how many withdrawals you can make. We don’t charge for making withdrawals from your pension pot.

If you’re considering this option, consider how much you take out every year and how long your money needs to last.

Depending on when you take your money and the amount(s) withdrawn, there may be tax implications for making withdrawals from your pension pot. You’ll need to consider your own personal tax circumstances and in particular whether taking taxable lump sum(s) may mean you have to pay a higher rate of tax than normal.

Charges will continue to be taken from any money left in your pension pot, so it’s important to consider the impact of these charges. If you plan to invest the cash elsewhere, check what the charges are before you do so.

Also, remember that making cash withdrawals may affect whether you can receive means-tested benefits. It can also affect people in debt, especially those who have payment arrangements with their creditors. If you’re concerned about either of these things, you can contact the Citizen’s Advice Bureau or MoneyHelper.

You can use some or all of your pension pot to buy a guaranteed regular income, either for the rest of your life or up until a specific age or date. This is known as an ‘annuity’.

If you choose to buy an annuity, you can still take up to 25% of your pension pot as a tax-free lump sum before you purchase. You’ll then pay income tax on the pension you receive from your annuity.  If you don’t take tax free cash but choose instead to use all your savings to buy an annuity, your tax-free cash will be incorporated into your annuity income.

There are a number of benefits that you can add to an annuity in return for a lower starting pension. Examples include continuing payments for a minimum period of time, ensuring that your partner receives an income if you die, or securing future increases in payment to counter the effects of inflation.  Your income will depend on a range of factors, including how much of your pension pot you use to buy it, the number of benefits you select and your general health.

You can buy an annuity from an insurance company or specialist annuity provider. TPT doesn’t offer annuities, but you can access an annuity quick quote checker to get an understanding of the regular income your pension pot could generate if you used it to buy an annuity. There are many types of annuity to choose from, and the amount you get from each can vary.

Once you set up your annuity, you can’t change it, but the income you’ve bought is guaranteed for the whole term of the annuity. There are no further fees for accessing that income.

If you have a medical condition, are in poor health, smoke or are overweight, you may be able to get a higher income by answering health and lifestyle questions. It’s important to answer these questions honestly, as they can directly affect how much income you are offered.

You should think about what options to include in your annuity.

• Do you want to provide an income for a partner or another dependant if you die? You’ll need to consider the income you’ll receive if you buy a single-life or joint-life annuity.
• Do you want to include future increases in your payments? Annuities that don’t include increases provide a higher income to start with than annuities that increase. This means that the payments will stay the same for the whole term of your annuity, but the buying power of your annuity income will reduce over time due to inflation.

Different providers offer different annuity rates, so it’s important to shop around to see who offers the best rates of income for you. Remember that annuity purchases are a lifetime commitment, so take your time before making a final decision.

With this option, you can take tax-free cash from your pension pot and move your taxable pension savings into a TPT drawdown account. Here, you can invest your money to suit your later life goals, whether you’re looking for regular income, want to take money out as and when you need it, keep it aside for a rainy day, or build a legacy for your family.

There are two ways to use TPT drawdown:

• Use it to provide a regular income.
• Keep it invested until you need it.

Once you access any of your taxable income from drawdown, it will trigger the money purchase annual allowance (MPAA) which affects how much you can pay into your pension(s) before you start to pay tax on the contributions made by you and your employer.

It’s worth noting that you can choose a drawdown option to access your tax-free cash and then go on to buy an annuity from your drawdown account at a later date, but you can’t buy an annuity now and change your mind later.

If you choose TPT drawdown, we’ll send you a further illustration to confirm your options and provide a projection of how long we project your drawdown pot might last.

The money in your TPT drawdown account is taxable when you withdraw it. If there’s money left in your drawdown account when you die, this will be available to your beneficiaries. This is different to an annuity, where typically nothing is paid out after death. Death benefits are usually tax free if you die before age 75 and are taxable thereafter.

You’ll need to consider how much you take out each year and how long your money needs to last. If you take out too much money too quickly, your available retirement income could fall drastically or even runout, especially if the value of your investments fall.

The money in your TPT pot (pension savings and drawdown account) will continue to be invested and can therefore go down as well as up in value.

TPT cannot accept transfers into a drawdown account. If you wish to transfer-in funds from other pension schemes, you would need to do this before you take drawdown.

There are alternative pension and retirement income providers, and we encourage you to shop around when making this important decision, to ensure you’re comfortable with the provider to meet your future needs. If you’d prefer to transfer out of TPT to an alternative provider, please call us to request a transfer out pack.

TPT doesn’t charge for transfers out. You can do this at any time, and there's no penalty to do so.

You can mix and match between different pension options. For example, you could take your full 25% tax-free cash, then move half of your taxable pension savings into a TPT drawdown account and use the rest to buy an annuity. Or you could take half your pension savings as a lump sum and leave the rest in your pension pot to use later.

Please note that income from drawdown options needs to be at the same frequency, i.e. if you select managed income or future annuity income and want to add flexi-access income, this will be on a monthly basis as the first two options are only paid monthly. 

If you choose a drawdown option, it's important to remember that all the money in your TPT pot (pension savings and drawdown) is still invested. As with every investment, there’s the risk that values can go up and down. 

You’ll need to consider how much you take out each year and how long your money needs to last. If you take out too much money, too quickly, your available retirement income could fall drastically or even run out, especially if the value of your investments fall.

Different schemes and providers offer different types of flexible drawdown. Some might have products where part of your income is guaranteed but charges and conditions will apply. 

Remember, every provider has different charges that can reduce the amount of money you receive. Check for any charges or other reductions to a pension pot when a lump sum is withdrawn. TPT doesn’t charge for withdrawals. Providers and schemes may also make ongoing charges on any undrawn money, so it’s important to consider the impact of these charges. 

And if you plan to take the cash to invest somewhere else, check their charges before you do so.

People considering a flexible retirement income should consider shopping around – an FCA-regulated financial adviser will be able to help you understand the range of options available.

You don’t have to take your savings now. They’ll stay invested with us until you’re ready although, as with any investment, they will go up or down in value.

You can check the value of your savings at any time and make changes to your planned retirement date in your online account. 

It’s a good idea to regularly check your savings, not only to see how much you have saved, but to consider your future lifestyle and whether you’ll have enough money to make it a reality.

You can also review your investment choices and update them if your circumstances or preferences change. For example, you might want to target better returns or to move your savings into our ethical investment fund.

Making contributions

If you’re still employed, taking benefits from your TPT pension pot doesn’t interrupt any ongoing contributions you and your employer make, unless you tell your employer you wish to cease membership. You can simply build up further pension savings in your TPT pot that you could take out in the future. The only exception to this is if you want to take your entire pension pot as a lump sum of up to £10,000 under the ‘small pots’ rules, in which case you’ll need to leave your employer’s pension scheme to take all the pension savings you hold with TPT as a ‘small pot’.

If you continue to contribute and take any of your taxable pension savings in any way other than a small pot lump sum, it will trigger the money purchase annual allowance (MPAA). Please see below for details.

If you intend to stop contributing, please let your employer know as soon as possible, as we’ll need to await your final contribution before we can finalise your retirement application. 

The money purchase annual allowance (MPAA)

You and your employer can pay the value of your earnings up to the annual allowance of (currently) £60,000 into your pension each tax year before paying tax on your pension contributions. However, as soon as you access the taxable element of your pension savings, this limit is reduced to the money purchase annual allowance (MPAA), which is currently £10,000. It is important to remember that this limit applies to any and all pensions you may have and is not limited to the pension(s) you have with TPT. However, it does not include the State Pension.

You’ll trigger the MPAA by:

• taking a cash lump sum of more than your tax-free portion (but please see notes on small pots below)
• taking money out of a TPT drawdown account *

* Moving pension savings into a TPT drawdown account doesn’t trigger the MPAA; you only trigger the MPAA when you make a withdrawal from your drawdown account. So, if you take some or all of your tax-free cash, then move the taxable portion into your TPT drawdown account but leave it untouched, you and your employer can continue to make total contributions up to the annual allowance before paying tax. 

For more information on pension allowances, click here. 

Small pots

Where you are accessing your whole TPT pot and this is valued at less than £10,000, we can check whether your cash lump sum would be eligible for payment under the ‘small pot’ rule.  Small pots don’t trigger the money purchase annual allowance (MPAA) and aren’t included in the lump sum allowance (LSA) or lump sum and death benefits allowance (LSDBA). We’ve explained more about these allowances below.

All your pension savings with TPT would need to be paid to you in a single lump sum to qualify as a small pot payment.

If you request all your pension savings are paid to you in one lump sum, we will check your eligibility for this option as part of your application. If it applies, we’ll pay your cash lump sum as a small pot.

Lump sum allowances

The Government limits the amount of tax-free cash you can take from your pension in your lifetime.

The Government abolished the lifetime allowance (LTA) on 6 April 2024, when the LTA stood at £1,073,100, and replaced it with the lump sum allowance (LSA) and the lump sum and death benefits allowance (LSDBA). These limit the tax-free cash that can be paid in your lifetime and following your death.

• Lump sum allowance (LSA)
  The LSA of £268,275 is the maximum tax-free cash you can take from all your pension schemes in your lifetime. This amount is equal to 25% of the final LTA when it was abolished in 2024.
• Lump sum and death benefits allowance (LSDBA)
  The LSDBA limits the total tax-free lump sums that can be paid from pensions in your lifetime and on your death.  It includes your 25% tax-free cash entitlement and any non-taxable lump sum death benefits paid on your death.

If you think you may be about to breach your lump-sum allowance, you will need to let us know. If so, we will need to request further details of the pension lump sums you’ve received in your lifetime so we can calculate what you remaining tax-free cash allowance is for the purposes of this quotation. The administrator(s) of any other pensions you have will be able to provide the details you need if you don’t already have them. 

Tax-free cash recycling

If you plan to take tax-free cash from your pension and reinvest this in another pension scheme, there may be extra tax to pay. This is because you’d get tax relief twice on the same money, and HMRC has rules about this. This would currently apply if you take more than £7,500 tax-free cash from pension savings in a 12 month period and then pay more than 30% of this into another pension scheme. 

If you think you will be affected by any of the tax issues, we strongly advise you to take independent financial advice about how your retirement choices as they may affect your tax position.

Pension scams

Pension scams can lose you your pension, and result in significant tax charges. Please remember that pension savers are being increasingly targeted by scammers attempting to lure them to ‘safe havens’. If you receive an unsolicited phone call, email or text relating to a pension transfer, or an offer seems too good to be true, please exercise extreme caution and speak to a regulated financial adviser before deciding. You can find a list of advisers on the MoneyHelper website.