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What rights do I have to a lump sum?
In general, you will be able to take 25% of the value of your pension pot as a tax-free lump sum. However, there are special rules for salary-related and money purchase pension pots that are below a certain value.
If you are at least 55, you may be able to take a small pension as a cash lump sum. If you are in a defined benefit pension scheme and the value of all your pension benefits when added together does not exceed £30,000 in total, you may be able to take the whole of your pension as cash. This is known as a ‘trivial commutation lump sum’.
If you are in a defined contribution scheme you may be able to take the whole of your pension as a small pot if the value of your pension arrangement does not exceed £10,000 (with the option of taking up to three small pots of £10,000 or less). The Pensions Advisory Service looks at these choices in more detail.