One of the retirement options that may be available to you is to take your pension gradually, as and when you need to top up your income.

Access your pension savings gradually

Taking your pension flexibly can be done in two ways. These are:

  • Flexi-Access Drawdown
  • Uncrystallised Funds Pension Lump Sums

Just so you know, these options vary depending on which Creative Pension Trust workplace pension your employer has selected. To understand which options are available to you, take a look at your Retirement Guide, which you can find in the Creative Pension Trust Member Portal.

Alternative retirement options include:

Your choices at retirement are some of the most important financial decisions you will make. To ensure you understand your options and can make the best decisions, you may want to consider seeking financial advice. You can find out more about financial advice and guidance on this website.

Read your Retirement Guide
You may need to speak to us about this
Applies to all our plans

Understanding your options

To help you understand the options available to you, watch this video about retirement choices:

How to take your pension flexibly

There are two different ways you could take your Creative Pension Trust pension gradually, accessing it as and when you need to. Below is a breakdown of each type so you can better understand them both. Alternatively, you can look at our comparing retirement options page to better understand which option suits your circumstances.

Flexi-Access Drawdown

You can access the tax-free cash in your pension savings flexibly and leave the rest of your savings to continue growing. You can stay an active member of your pension, paying in regularly and benefitting from your employer’s contributions and any tax relief. You can also use your savings differently in the future if your retirement plans change.

Why might you choose this?

The earliest you can access your pension savings is when you reach your 55th birthday, an age set by the government. Creative Pension Trust gives you freedom and flexibility in choosing how to draw your pension. Flexi-Access Drawdown isn’t suitable for everybody, but it does give you the flexibility to access your pension now without locking you into an arrangement that you can’t change. For example, you may:

  • need access to your tax-free cash to meet other financial goals as you come up to retirement, like paying off your mortgage, but have no need for a retirement income yet
  • have other sources of income that are normally enough to meet your outgoings but may not stretch to occasional larger expenditures

It is important to remember that, on average, someone who is aged 55 today will likely live into their mid-to-late 80’s. This means your pension will likely need to last you a long time. Whilst Flexi-access drawdown offers you freedom and choice to use your savings as you wish, you will need to ensure you do not run out of money by drawing from your savings too quickly.

What happens to your pension savings?

If you choose Flexi-Access Drawdown you can draw from your tax-free cash allowance, either in one go or in multiple varying amounts. You can take up to 25% of your pension savings tax-free and the remaining three quarters will be taxable when you choose to take it.

Each time you take a tax-free lump sum payment, we will automatically transfer three-times the amount you have taken from your Creative Pension Trust Account into a new Flexi-Access Drawdown Account. This way, we can give you your tax-free cash whether you decide to take it all at once or in a number of smaller withdrawals, without you needing to take taxable benefits too.

The amount transferred into your Flexible Access Drawdown Account will be taxable at your highest marginal rate of Income Tax when you decide to draw it. This is normally calculated using emergency tax, and you will need to settle any overpayments or underpayments with HMRC directly.

The rest of your pension savings will remain in your existing Creative Pension Trust Account where they can continue to grow through further contributions and investment growth*.

*It is important to remember that the value of your investments can go down, as well as up, and you can get back less than you invested.

Will you need to review your pension arrangements?

Yes, you will need to actively review and manage your pension arrangements. It’s important to remember that your pension savings will remain invested until you draw them, so you will need to be comfortable that your pension is appropriately invested.

Your pension savings will remain invested in the same funds until you tell us otherwise. Investments can fall as well as rise, so you will need to consider how frequently and soon you are likely to draw some of your pension. You may consider switching some of your pension into investments designed to preserve the value of your savings, so that money is ready to be drawn when you need it.

Because Flexi-Access Drawdown does not guarantee your income and your pension will not last forever, you will also need to regularly review how much you are taking to ensure you are not going to run out of money too early.

Finally, because your Creative Pension Trust account will remain open, it’s really important that you keep your information up to date. Using the Creative Pension Trust Member Portal you can:

  • Provide us an up-to-date personal email address, which we need to communicate important updates about your pension to you
  • Nominate your beneficiaries so we know what you want to happen to your pension savings if anything happens to you
  • Easily consolidate other pensions into Creative Pension Trust to give you a clear view of your total pension savings**

**You should understand the features and charges of other pensions first and seek professional financial advice if you are not sure. Check with your product provider before transferring as there may be a penalty for leaving their scheme.

Are there other flexibilities?

Yes, this option provides the greatest level of flexibility. You can access your pension savings periodically in the most tax efficient way and you can still change your mind about how you want to receive your pension income in the future if your needs change.

This way, you could begin drawing your pension as and when you need to, take no further income in future if you don’t need it and preserve the remaining value, or convert your savings to a guaranteed income further down the line.

Are there any limits or other considerations?

Yes, there are limits that apply to this option. These are:

  • To use Flexi-Access Drawdown, you’ll need a minimum pension pot of £10,000
  • There are charges to set up and administer this option
  • Once you start using this option, you’ll need to retain a balance of £5,000. Once your balance goes below this amount, you will need to take the remaining balance along with the amount you requested
  • You can make up to 4 withdrawals a year, one in each quarter
  • The minimum for each withdrawal is £2,000
  • The first 25% of your pension pot will be paid free from tax. Once this has been accessed, the remaining three-quarters will be treated as taxable income. You may be charged emergency tax by HMRC and will need to settle any overpayments or underpayments with HMRC directly
  • If you take benefits from your Flexi Access account pension savings whilst actively paying into this or any other pension scheme, the total amount you can pay in each year will reduce to £4,000***. This is known as the ‘Money Purchase Annual Allowance.’

Yes, there are further additional considerations that may impact your decision making and future plans. These are:

  • Paying a lump sum into your pension after taking tax-free cash out may be considered by HMRC as ‘pension recycling’. You may be liable to a tax penalty if this is deemed to be the case
  • If you are planning to make this choice, you should review how your pension savings are invested

For more information, visit Age UK, the Citizens Advice Bureau, or MoneyHelper, who also offer telephone and face-to-face appointments.

***Allowances, limits and tax bands are set by the Government and subject to annual review. All information provided is based on current legislation and HMRC rules, which are subject to change.

Can you access tax-free cash?

Yes, up to 25% of your pension pot will be paid free from tax. The remaining three-quarters will be treated as taxable income when you start to draw it.

Will your money be taxed?

Yes, up to 25% of your pension pot will be paid free from tax, the remaining three-quarters is treated as taxable income when you draw it. You may be charged emergency tax by HMRC when you draw some of your pension savings and you will need to settle any overpayments or underpayments with HMRC directly.

Are there income guarantees?

No, flexi-access drawdown does not provide any income guarantees. Although you have flexibility around how and when you use your pension savings, you will need to actively manage your finances and perform regular checks to ensure you will not run out of money by taking your savings too quickly.

If you decide you would like a guaranteed income later on and you have sufficient pension savings left in your Creative Pension Trust account, you still have the flexibility of using your money to buy an annuity, which can provide guaranteed income.

What happens when you die?

If you die before your 75th birthday, your pension pot will be paid to your nominated beneficiaries, subject to the normal checks. This may be your family and loved ones or even a charity.

You can tell us what you would like to happen by nominating your beneficiaries in the Creative Pension Trust Member Portal[link to login page]. The payment is usually tax-free unless you die after your 75th birthday, in which case tax is paid according to the recipient’s tax position.

An example

You are 60 years old and have pension savings of £60,000. You have decided you would like to help your grandchild get a foot on the property ladder by paying £5,000 towards a house deposit.

In order to do this, £20,000 of your pension savings are transferred out of your Creative Pension Trust Account.

The first 25% (£5,000) is paid to you tax free and the remaining three quarters (£15,000) is transferred into a new Flexi Access Drawdown account. The balance in your Flexi Access Drawdown account can then be accessed in the future and will be taxed at your highest marginal rate when you draw it.

As you still have a balance of £40,000 in your Creative Pension Trust Account, this stays invested for the future. When you need to access further tax-free cash lump sums of up to 25% of the amount in this account, we will pay this to you free of tax and transfer three-times the amount you requested into your Flexi Access Drawdown account. You will still be able to pay in to your Creative Pension Trust account, meaning you can benefit from employer contributions, tax relief (where available) and investment growth***.

However, when you access any savings from your Flexi Access account, you will be subject to the ‘Money Purchase Annual Allowance’, which means the total you can pay into any and all of your pension arrangements, as well as Creative Pension Trust, is £4,000*** in any one year.

Example: You have £60,000 in pension savings and want to access a tax-free lump sum of Amount transferred out of Creative Pension Trust Account Amount paid to you free of tax Amount transferred into your Flexi-Access Drawdown account What happens
£5,000 £20,000 £5,000 £15,000 Having received your tax-free lump sum, which is 25% of the amount transferred out of our Creative Pension Trust account, the remaining three-quarters will be taxable when you draw it out. The amount of tax will depend onyour tax status at the time. You will have £40,000 left from which you can also take future tax-free lump sums in future.
£15,000 £60,000 £15,000 £45,000 Having received your tax-free lump sum, you no longer have any remaining tax-free cash because you have taken the maximum amount of 25% and the remaining three-quarters (£15,000) will be taxable when you draw it out. The amount of tax will depend on your tax status at the time.

***Allowances, limits and tax bands are set by the Government and subject to annual review. All information provided is based on current legislation and HMRC rules, which are subject to change.

Uncrystallised Funds Pension Lump Sums (UFPLS)

As an alternative to Flexi-access drawdown, you might consider Uncrystallised Funds Pension Lump Sums.

You can access your pension savings flexibly, topping up your income as and when you need to, but leaving the rest of your savings to continue growing. You can stay an active member of your pension, paying in regularly and benefitting from your employer’s contribution and any tax relief. You can also use your savings differently in the future if your retirement plans change.

Why might you choose this?

The earliest you can access your pension savings is when you reach your 55th birthday, an age set by the government. Creative Pension Trust gives you freedom and flexibility in choosing how to draw your pension. ‘UFPLS’ isn’t suitable for everybody, but it does give you flexibility to access your pension now without locking you into an arrangement that you can’t change.

For example, you may:

  • not need to access a lump sum from your tax-free cash
  • decide to go part time and use your pension to top up your income, or have other incomes you may want to top up from time to time
  • want to preserve as much of your pension savings as possible so they can be passed to loved ones as an inheritance

It is important to remember that, on average, someone who is aged 55 today will likely live into their mid-to-late 80’s. This means your pension will likely need to last you a long time. Whilst flexi-access drawdown offers you freedom and choice to use your savings as you wish, you will need to ensure you do not run out of money by drawing from your savings too quickly.

What happens to your pension savings?

If you choose UFPLS you can draw the savings you need, and the remainder stays in your Creative Pension Trust account where it can continue to grow through further contributions and investment growth*.

Rather than accessing all of your tax-free cash in one go, UFPLS spreads your tax-free cash across each amount you take. Each time you access your savings, 25% of the amount you draw will be paid to you tax-free and the remaining three-quarters will be taxed at your highest marginal rate. This is normally calculated as emergency tax, and you will need to settle any overpayments or underpayments with HMRC directly.

Depending on the amount of other taxable incomes you may have, UFPLS can be used to provide a top up to your income in a very tax efficient way because 25% of each payment is tax-free.

However, if you are already receiving a relatively high level of taxable income from other sources this option can increase your overall tax bill significantly, particularly if all your incomes combined pushes you into a higher tax bracket.

*It is important to remember that the value of your investments can go down, as well as up, and you can get back less than you invested.

Will you need to review your arrangements?

Yes, you will need to actively review and manage your pension arrangements. It’s important to remember that your pension savings will remain invested until you draw them, so you will need to be comfortable that your pension is appropriately invested.

Your pension savings will remain invested in the same funds until you tell us otherwise. Investments can fall as well as rise, so you will need to consider how frequently and soon you are likely to draw some of your pension.

You may consider switching some of your pension into investments designed to preserve the value of your savings, so that money is ready to be drawn when you need it. Because UFPLS does not guarantee your income and your pension will not last forever, you will also need to regularly review how much you are taking to ensure you are not going to run out of money too early.

Finally, because your Creative Pension Trust account will remain open, it’s really important that you keep your information up to date. Using the Creative Pension Trust Member Portal you can:

  • Provide us an up-to-date personal email address, which we need to communicate important updates about your pension to you
  • Nominate your beneficiaries so we know what you want to happen to your pension savings if anything happens to you
  • Easily consolidate other pensions into Creative Pension Trust to give you a clear view of your total pension savings**

**You should understand the features and charges of other pensions first and seek professional financial advice if you are not sure. Check with your product provider before transferring as there may be a penalty for leaving their scheme.

Are there other flexibilities?

Yes, you can access your pension savings periodically in varying amounts and you can still change your mind about how you want to receive your pension income in the future.

This way, you could begin drawing your pension as and when you need to, take no further income in future if you don’t need it and preserve the remaining value, or convert your savings to a guaranteed income further down the line.

Are there any limits or other considerations?

Yes, there are limits that apply to this option. These are:

  • To use UFPLS, you’ll need a minimum pension pot of £10,000
  • There are charges to administer this option
  • Once you start using this option, you’ll need to retain a balance of £5,000. Once your balance goes below this amount, you will need to take the remaining balance along with the amount you requested
  • You can make up to 4 withdrawals a year, one in each quarter
  • The minimum for each withdrawal is £2,000
  • The first 25% of each amount you draw will be paid free from tax. The remaining three-quarters will be treated as taxable income. You may be charged emergency tax by HMRC and may need to reclaim any excess tax from them
  • If you take benefits from your pension savings whilst actively paying into this or any other pension scheme, the total amount you can pay in each year will reduce to £4,000***. This is known as the ‘Money Purchase Annual Allowance’

Yes, there are further additional considerations that may impact your decision making and future plans. These are:

  • If you take a lump sum from a pension with the intention of paying it back in, you may break ‘pension recycling’ rules imposed by HMRC to prevent the recycling of tax-free cash back into a pension to receive further tax relief. If HMRC believe you have done so, you may liable to a tax penalty
  • If you are planning to make this choice, you should review how your pension savings are invested.
  • Taking all of your pension benefits as cash in one go may affect any means-tested benefits you may be receiving or may be entitled to.

For more information, visit Age UK, the Citizens Advice Bureau, or Pension Wise, who also offer telephone and face-to-face appointments.

***Allowances, limits and tax bands are set by the Government and subject to annual review. All information provided is based on current legislation and HMRC rules, which are subject to change.

Can you access tax-free cash?

Yes, but this option is designed to spread your tax-free cash across each withdrawal you make, it may not be right if you need to access all of your tax-free cash in a single lump sum.

Will your money be taxed?

Yes, although the first 25% of each amount you draw will be paid free from tax, the remaining three-quarters is treated as taxable income. You may be charged emergency tax by HMRC when you draw some of your pension savings and you will need to settle any overpayments or underpayments with HMRC directly.

Are there income guarantees?

No, UFPLS does not provide any income guarantees. Although you have flexibility around how and when you use your pension savings, you will need to actively manage your finances and perform regular checks to ensure you will not run out of money by taking your savings too quickly.

If you decide you would like a guaranteed income later on and you have sufficient pension savings left in your Creative Pension Trust account, you still have the flexibility of using your money to buy an annuity, which can provide guaranteed income.

What happens when you die?

If you die before your 75th birthday, your pension pot will be paid to your nominated beneficiaries, subject to the normal checks. This may be your family and loved ones or even a charity. You can tell us what you would like to happen by nominating your beneficiaries in the Creative Pension Trust Member Portal [link to login page]. The payment is usually tax-free unless you die after your 75th birthday, in which case tax is paid according to the recipient’s tax position.

An example

You are 59 years old and have a pension pot of £40,000. You want to reduce your working hours a little and would like to draw some of your pension so you can supplement your income. To do this, you decide to take an initial sum of £4,000 from your Creative Pension Trust account.

The first £1,000 of the sum is paid to you tax-free. The remaining three-quarters you take is taxable at your highest marginal rate. So, if you are a Basic Rate taxpayer, you will need to pay £600*** on the remaining £3,000, leaving you £2,400. In total, you will have £3,400 to spend after tax. If you are a Higher Rate taxpayer, or if taking the £4,000 on top of your existing income pushed you into the Higher Rate tax bracket, the first £1,000 of the sum would still be tax free, but the tax on the remaining three-quarters would be £1,200***. In total, you would have £2,800 to spend after tax.

As you still have a balance of £36,000 in your Creative Pension Trust Account, this stays invested for the future and you retain access to future lump sums as and when you need them. You will still be able to pay into your Creative Pension Trust account, meaning you can benefit from employer contributions, tax relief (where available) and investment growth*.

However, because you have accessed your pension benefits, you will be subject to the ‘Money Purchase Annual Allowance’, which means the total you can pay into any and all of your pension arrangements, as well as Creative Pension Trust, is £4,000*** in any one year.

Basic Rate taxpayer Higher Rate taxpayer
UFPLS amount taken: £4,000 £4,000 £4,000
First 25% of pension pot paid to you tax-free £1,000 £1,000
Remaining three-quarters to be taxed £3,000 (at 20%) £3,000 (at 40%)
Tax payable £600 £1,200
Value after tax paid £2,400 £1,800
TOTAL PAID TO YOU £3,400 £2,800

Important information about pension investments and retirement:

  • The value of your investments may go down as well as up
  • As with all investments, you may not get back what you initially invested

***Allowances, limits and tax bands are set by the Government and subject to annual review. All information provided is based on current legislation and HMRC rules, which are subject to change.

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