The Most Commonly Asked Pension Questions

When it comes to retirement planning, it’s natural to have questions. After all, your pension is likely to be one of the most important financial assets you’ll rely on in later life.

At My Pension Expert, we speak to thousands of UK individuals each year who want to understand their retirement options better. So, what are people’s most pressing concerns?

In this article, we’ll explore the most commonly asked pension questions and provide clear, helpful answers to guide you through the retirement planning process.

1. When Can I Access My Pension?

One of the most asked pension questions is: When can I start drawing my pension?

The minimum age to access most private pensions in the UK is 55, rising to 57 in 2028. However, the State Pension age is separate and depends on your date of birth. It is currently 66 for most people and is set to rise further in future years. If you plan to retire early, you may need alternative income sources or consider a phased retirement strategy. Knowing your pension’s specific rules is essential to avoid surprises when the time comes.

2. How Much Will I Get From My Pension?

This is one of the most asked pension questions your retirement standard. However, there’s no one-size-fits-all answer, the amount you’ll receive depends on several interrelated factors.

There are two main types of pensions in the UK:

Defined Contribution (DC) pensions: The amount you get depends on how much you (and your employer) have contributed, how the investments have performed, and how you choose to take the money (e.g. lump sum, drawdown, or annuity).

Defined Benefit (DB) pensions: These are typically workplace pensions that pay a guaranteed income based on your salary and years of service. They’re often called ‘final salary’ or ‘career average’ pensions and tend to offer more predictability than defined contribution schemes.

Each type calculates your retirement income differently, so it’s essential to understand and know which one you have or if you have a combination of both in some cases. To get a precise estimate of your future pension income, consider using the Government online pension calculator or requesting a pension statement from your provider.

3. Should I Take A Lump Sum?

Another one of the most commonly asked pension questions is how to best use one’s pension pot, especially for those approaching retirement who are considering how to do so. The idea of taking a large lump sum of tax-free cash is appealing, but it’s key to understand the implications before finalising your decision.

In most defined-contribution pensions, you are able to take up to 25% of your pension pot tax-free. This is known as the Pension Commencement Lump Sum (PCLS). The remaining 75% can be used to provide an income as a drawdown, an
annuity, or a combination of both.

Why do people take a lump sum?

There are many reasons people choose to access their pension lump sum:

Paying off debts such as mortgages, loans or credit cards

Making a large purchase such as a new car, home improvements or a holiday

Helping family members with things like university fees or house deposits

Because this decision can have far-reaching consequences, many people benefit from professional advice. A regulated financial adviser can help you:

Assess whether a lump sum aligns with your retirement goals

Understand the tax implications of different withdrawal strategies

Explore alternatives, such as partial drawdown or flexible access

Plan for sustainable income and long-term financial security

Taking a lump sum is a hugely popular options and it can be incredibly useful, but it’s not always the best move for everyone. It’s important to balance immediate needs with your long-term requirements. That’s why this remains one of the most asked pension questions and one of the most important ones to get right.

4. What’s The Difference Between an Annuity and a Drawdown?

This is one of the most asked pension questions, as both options offer different retirement outcomes. An annuity provides a guaranteed income for life or a set period. You buy it with part or all of your pension pot and, in return, receive regular, predictable payments. It is ideal for those who want financial security without managing investments.

On the other hand, a drawdown allows you to keep your pension invested while withdrawing money when needed. It offers increased flexibility and growth potential but carries the risk of market losses and running out of cash if the withdrawals are too high. It suits those who want control and are comfortable with some level of risk.

Some retirees combine both options, using an annuity to cover essential bills and drawing down for extra spending. Since choosing the right choice can affect your income for decades, it’s no surprise that this remains one of the most asked pension questions and a key reason many seek independent financial advice.

5. Will My Pension Be Taxed?

Yes, and this is another of the most asked pension questions. Generally, 25% of your pension pot can be taken as tax-free. The remaining 75% is taxed as income based on your personal tax band. If you withdraw large sums, you could push yourself into a higher tax bracket. It’s essential to plan withdrawals carefully to avoid unnecessary tax.

You may also be entitled to your full personal allowance, which can reduce your tax liability further. Speaking with a financial advisor can help you withdraw funds in a tax-efficient way.

It’s also worth noting that different pension access strategies can result in different tax outcomes. For instance, taking smaller, regular withdrawals rather than a large lump sum may help you stay within a lower tax band and preserve more of your pension pot. If you continue to work or receive other income, it’s especially important to consider the timing and amount of your pension withdrawals.

In some cases, retirees unintentionally pay more tax than necessary simply because they haven’t optimised the order or structure of their pension income. Tax planning is a key part of an effective retirement strategy. Our Experts are on hand to help you run through all your options so you can retire as seamlessly as possible.

6. What Happens to My Pension When I Die?

This is a key question about pensions, particularly for those considering legacy planning.

When it comes to passing on your pension, one of the most significant advantages of a drawdown pension is the flexibility and potential tax benefits it offers to your beneficiaries. Suppose you pass away while still having funds in your drawdown account. In that case, you can pass on your remaining pension pot to your loved one tax-efficiently, ensuring that your hard-earned savings will benefit your family even after you’re gone.

Another option available to your beneficiaries is converting the pension pot into an annuity. An annuity provides a regular income for the recipient, offering a steady stream of financial security for their retirement. This option can be particularly beneficial if your beneficiaries seek guaranteed income over the long term.

With a defined contribution pension, whatever funds remain in your pot can usually be passed on to a beneficiary. If you die before age 75, it’s typically tax-free, after 75, it may be subject to Income Tax when your beneficiary withdraws it. Defined benefit pensions may offer a reduced ongoing income to a spouse or dependent. Ensuring you’ve nominated beneficiaries and reviewed your plan regularly is essential for passion on your pension effectively.

7. Should I Combine My Pensions?

Many people who’ve worked multiple jobs find they have several small pension pots, leading to this also being one of the most commonly asked pension questions. Combining pensions, also called pension consolidation, can simplify management, reduce fees, and make it easier to track your retirement savings.

However, some older pensions may come with valuable benefits such as guaranteed annuity rates, which you’d lose if transferred. It’s essential to weigh convenience against potential loss of benefits and seek advice before making changes to ensure it’s the right decision for your financial future.

8. Does My Pension Keep Up with Inflation?

Inflation is a real concern for retirees, and this question ranks high among the most asked pension questions.

Defined benefit pensions often include inflation protection, ensuring your income rises yearly. With defined contribution pensions, it depends on how you access your money. If you buy an inflation-linked annuity, your income will rise with the cost of living. If you choose a drawdown, you must manage withdrawals carefully to ensure your income keeps pace with inflation. Failing to plan for inflation can seriously chip away your spending power over time.

9. Can I Contribute to My Pension After Retirement?

Many individuals approaching retirement wonder if they can continue contributing to their pension pot once they start drawing from it. This is another of the most asked pension questions, as people often want to boost their retirement savings after they stop working.

The good news is that you can still contribute to your pension after retirement, provided you’re under 75. However, some restrictions exist, such as needing relevant earnings, meaning you must earn income from employment or self-employment. The government also sets an annual contribution limit, typically £60,000 for the 2025/26 tax year for most people, but it can be lower if you’ve already accessed your pension pot.

Contributing to your pension can effectively increase your retirement income while benefiting from tax relief. But it’s essential to review the rules and seek advice before making any contributions to ensure you make the best decision for your long-term financial plan.

10. How Do I Protect My Pension from Scams?

With pension scams becoming increasingly prevalent, it’s no surprise that the most commonly asked pension questions often revolve around how to protect your savings from fraudsters. Scammers may allow you to access your pension early or invest it in high-risk schemes, frequently promising unrealistically high returns.

To protect your pension, always be cautious of unsolicited offers, especially those that seem too good to be true. Be wary of companies or individuals who encourage you to transfer your pension to a different scheme or offer early accessibility. If in doubt, always check the legitimacy of any pension advice or investment opportunity with a regulated financial advisor. Staying vigilant and seeking expert advice can help ensure your retirement pension remains safe and secure.