Pension benefits
You'll learn how pension benefits work from age 55 onwards, including withdrawal options, tax treatment, and annuities. This covers personal pension plans, the tax-free lump sum allowance, and how income drawn from pensions is taxed as non-savings income—essential knowledge for understanding retirement planning and
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In this lesson
- 0:00 Pension benefits overview and withdrawal rules
- 0:19 Tax-free lump sum and taxable drawdowns
- 0:34 Understanding annuities and lifetime income
- 0:54 Tax treatment of pension withdrawals
About this lesson
tax efficiency in your studies. In this lesson, we explore what happens when you access your pension fund. From age 55, you can withdraw money flexibly—there's no requirement to take it all at once. The first key point is the tax-free lump sum: you can draw up to 25% of your pension fund without paying tax, and any amount beyond that becomes taxable as non-savings income. We also cover annuities, which convert your pension pot into guaranteed monthly income for life. An annuity calculates how much you should receive based on your fund size and pays it regularly, but this income is taxed as non-savings income, just like employment income. Understanding this tax treatment is crucial: you receive tax relief on contributions going in, but withdrawals are taxed on the way out.
Duration: 1m
Transcript
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