Let’s make this easier – a Pension Commencement Lump Sum (PCLS) is a complex way of saying “tax free cash”.
When you reach your retirement age, currently 55, you can take up to 25{42972646a1b11d15e0a7a9a6db4fb4925ffa9d0e1fa048d8f6e131eced035707} of your pension fund as a lump sum. This is tax free.
What can you use it for?
Spend it, clear the mortgage, save it or invest it. This cash injection can be a great boost to your retirement lifestyle. The only ‘off-limits’ investment is you cannot put it into another pension plan.
Things to watch for
Taking a lump sum will significantly reduce the value of your pension fund. Make sure you seek some independent specialist advice to see how this will affect your future income.
