How will you access your UK Pension?
- jiten31
- Jul 4, 2022
- 2 min read
Updated: Feb 18
Congratulations, you've retired! Now it's time to start drawing on your pension funds - sounds simple enough?
There are actually three different ways you can access your UK pension fund, and it's worth taking a little time to figure out which way suits you best.
1: Annuity
As a resident of Sweden, the purchase of an annuity fund to provide a consistent stream of retirement income is not currently available. Funds are available to UK residents.
2: Flexi-access Drawdown (FAD)
If you retired after the 6th of April 2015 you may choose to access part or all of your pension through Flexi-access drawdown. To access this, first ensure your pension savings are in a fund that allows drawdown - if not, you may move it before commencing.
The remainder of the fund can be drawn down as you need it, and will then be subject to annual income taxes as you draw it down.
This allows you to crystallise part of your pension fund now, and leave part of it to grow in the fund until you move back - at which stage you can commence another FAD and receive the benefit of the 25% tax free lump sum at that point in time.
3: Uncrystallised Funds Pension Lump Sum (UFPLS)
The UFPLS functions similarly to the flexi-access draw down in that 25% is tax-free when in the UK (not applicable in Sweden).
However, instead of deciding up front on the amount to crystallise, the relevant tax is applied with each amount withdrawn.
Advice for Swedish residents.
As a non-UK resident, you do not benefit from the 25% tax-free pension commencement lump sum. If you plan to move back to the UK in the future, you might consider a phased drawdown of several FADs, or a combination UFPLS and FAD allowing you to access some of your pension fund now, and retaining some which will be applicable for 25% tax-free when you move back.
For personalised advice, why not book a meeting to discuss what option works best for you?
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