Your pension has two parts: a tax-free part and a taxable part. Usually, 25% of your pension is tax-free (up to £268,275), and 75% is taxable.

 

When you start to take tax-free cash, we set up a drawdown pot. This helps you keep track of how much taxable pension and tax-free cash you have left. For every £100 you take as tax-free cash, we move £300 into your drawdown pot.

 

Some people with older work pensions may have a higher tax-free amount than 25%. If you have pensions with other providers, check with them if you’re not sure this applies to you.