Taking a cash lump sum

Sun Life Financial of Canada


You are being redirected to a website external to Sun Life Financial of Canada.

You are now leaving Sun Life Financial of Canada's website. Although Sun Life Financial of Canada is introducing you to
Legal & General as our pension annuity partner, we do not own the products and services offered on the site. Sun Life Financial of Canada disclaims any and all responsibility for the content, accessibility and privacy policies used on this site. Please review applicable privacy and security policies and terms and conditions for the site.

You can take your whole pension pot as one cash lump sum. The first 25% is tax-free. Anything you take beyond this will be taxed as income.

If you take all or most of your pot as cash, you’ll need to think about how you’ll make it last for the rest of your life. You’ll also need to think about the other things it might affect.

Because the money you take is treated as income, you could find yourself in a higher tax bracket. Being in a higher tax bracket means paying more tax. But it might also affect which state benefits you’re entitled to, as well as tax relief you can get on any other pension pots you’re saving into. What’s more, if you’ve got any debts, the people you owe could come after this money.

If you take most or all of your pot as cash, you’ll also lose any guaranteed annuity rates that were attached to it. And if you’ve got a medical condition or lifestyle that could reduce your life expectancy, that means you could apply for an enhanced annuity, you’ll lose this option too.

Taking regular cash sums over time

If you want to take the money in your pension pot as cash, but don’t want to take it all at once, you could take regular cash sums from your pot instead. This can help your tax bill. We don’t offer this, so if you’re interested, you’ll need to shop around.

Our annuity partner, Legal & General, has created a plan that lets you receive your money over a time period as short as 3 years or as long as 25 years. It’s called the Cash-Out Retirement Plan. To find out more, go to Legal & General’s website or call them on 0800 316 3062. Legal & General is a separate company from Sun Life Financial of Canada, so you might want to review their privacy policies and terms and conditions when you use the site.

Make the right decision for you – cash

If you cash in your whole pension pot, you can’t change your mind later. You could end up with a big tax bill and run out of money too soon, so you’ll need to plan carefully.

If you’re thinking about cashing in your whole pot, we’d recommend you go to Pension Wise to find out more. It’s a free service set up by the government. Pension Wise can’t tell you what to do with your money, but they can give you more information about pensions in general. They’ve also created an easy-to-use calculator that’ll estimate what you’d get after tax if you took your whole pot in one go.

For advice that’s specific to you, you’ll need to talk to a financial adviser. We’d always recommend you talk to one before making any big decisions about your money. You can find a financial adviser at www.unbiased.co.uk. They’ll probably charge you for their time.