- You can use the sum to clear your mortgage, but it might pay to give your pot more time to grow
- Avoid withdrawing just to park money in a savings account or reinvest it
- Tax-free cash could be more useful later in retirement
Giving you access to a nice nest egg with no tax liability, the 25 per cent pension tax-free lump sum can be a great option for those who use it wisely.
Once you turn 55, you are able to withdraw up to a quarter of your pension tax-free. The remaining 75 per cent of the pot can then be moved into a drawdown plan, used to buy an annuity or also taken as cash, and will be subject to income tax.