Pension query - what happens to the ££ if I stop paying in?

[Shytalker]

Hi there
I’m 54 and currently put £400 a month into a private pension. But I started this very late and only have £23k in the pot 😥

When I look at the forecast, it’s predicting a monthly income of about £400 a month, out of a £69k pot, but this is obviously only if I keep putting this money in, until I’m 68.

My question is, if I get to 60 and can’t keep up this level of paying in, or if I can’t contribute anything, especially if I have to give up work, will the pension simply pay out based on what’s in there, or will I be able to withdraw it as a lump sum?

Sorry to be so clueless about it!

You can take 25% if your pension pot tax free

The pension is invested so will keep growing even if you stop paying in. Even if you stop paying now it may well grow to about £45k. You can then take 25% tax free lump sum if you wish, then either take an income from it or take the whole lot if you wish (taxable).

If you stop paying in, it will remain invested until you "use it", the value might go up or down depending on the investment.

The way in which you "use it", will depend on your circumstances at that time and the legislation around "using it" then. There will be different choices! One way as PPs have said might be to claim up to 25% of it as a (tax free) cash lump sum and use the rest to buy yourself an income for the rest of your life. Or you might use the lot to buy an income or you might drawdown an income from it or....combine it with any other pensions you might have etc etc. Best speak to an Financial Advisor nearer that time!

Thanks for the replies, that’s all very helpful. I will try and leave it as long as possible so it can keep on (hopefully) growing!