Taking a lump sum
Your money to spend as you wish
What is a lump sum?
This option allows you to take all your retirement savings as a lump sum. There are different ways to do this depending on the value of your plan, it’s terms and conditions and whether you’ve already taken any lump sums.
Once you choose this option, you cannot change your mind.
What are the options from my Zurich plan?
In the majority of cases you will have to claim your savings as a single lump sum. However, you can claim as a series of lump sums if:
- you have already taken at least one lump sum from your plan; or
- your plan number starts with ‘P’ and includes BC, BD, BE, BG, BH or PBE.
If you’re unsure if these apply to you, give us a call and we’ll talk you through your lump sum options.
What if my plan does not allow me to take multiple lump sums?
You’ll need transfer your money to another provider with a pension product that does allow this.
How does it work?
The first 25% of each lump sum is usually tax-free and the rest is taxable. If you claim your savings as a series of lump sums, whatever remains in your plan will stay invested in your chosen funds and the value of these can go down as well as up.
You'll need to carefully consider how you use your money once it's withdrawn as it will need to last for the whole of your retirement and you could be retired for a long time.
Remember, once it's gone, it's gone.
Do you have an illness that may shorten your life expectancy or impact your ability to work?
There may be other options open to you if your life expectancy is less than 12 months or if you’ve a health condition that means you’re no longer able to continue working. Please call us if this applies to you so we are aware of your circumstances, can check whether you qualify and then tailor your options appropriately to meet your needs.
What else do I need to think about?
With this option, you'll need to think closely about the tax implications.
As 75% of any lump sum is taxable this might put you into a higher income tax bracket in the tax year it is paid.
If you take a lump sum then this may mean that you will be subject to the money purchase annual allowance (MPAA). If the MPAA applies and total contributions to all your money purchase pension plans in each tax year are more than the MPAA you will have to pay a tax charge. The MPAA is currently £4,000.
Taking lump sums could also affect any state benefits you qualify for. Please refer to the government's Pension Wise website for more information.
Zurich are not responsible for the content or external websites.
If there is anything left in your retirement savings when you die you can leave a lump sum or income to someone else.
If you're under 75 when you die, lump sums will usually be paid tax-free.
If you've reached 75 when you die, then any lump sums will be taxable.
Pension Wise
Access a free, impartial government service to help you make sense of your options with Pension Wise.
Zurich is not responsible for the content of external websites.