Taking a tax-free cash lump sum at retirement
The Lump Sum Allowance restricts the total amount of cash which you can take tax-free from all of your UK pension schemes to £268,275 (or to 25% of your LTA at 5 April 2024).
You can choose to exchange part of your pension for a tax-free cash lump sum but your pension will be reduced. Any spouse’s or children’s pension payable on your death will be paid based on your pension before you exchanged some of it for cash. The amount of pension you can exchange for cash may be restricted. Your remaining pension must be at least equal to any guaranteed minimum pension (this is the minimum pension which must be provided to satisfy contracting-out requirements for Scheme membership up to 5 April 1997).
An estimate of the amount of cash you can take and the reduction in your pension is contained in a pension forecast. Once you have confirmed your retirement date, you will be provided with accurate figures in your retirement pack.