Mike Freer, business development manager, BWCI, replies:
Basically, both are correct, but only in certain circumstances. It depends on how old you are and the size of your pension pot. Here’s an overview. You must check with your pension administrator, as different combinations of lump sums may affect the tax payable, as this is a complex area of the income tax law.
Assuming that you’re not in serious ill health, if you are under 50, then the only lump-sum option available would be for pension funds of up to £19,000.
These can be taken all as cash and are taxed as income. However, there’s an overall maximum cash limit of £50,000 across all of your pension savings in your lifetime.
If you are aged between 50 and 75, then you can take up to 30% of your pension fund as a tax-free cash payment, regardless of the size of your pension pot. The final option only applies if you’re over age 60. You can cash in a pension pot of up to £35,000 in full. 30% of that is tax-free and the rest is taxed at 10%.
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