How long does it take for a retirement account to be set up and money released?

29 July 2021

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Question by Linda

How long does it take for a retirement account to be set up and money released?


Answered by Cecilia Reilly

Hello Linda,

Without knowing the provider, you are referring to and your personal and financial circumstances, I am limited in the information I can provide.

Setting up retirement accounts is pretty straight forward, and you will need to complete the necessary provider forms, then it will depend on the providers timescales and can take a couple of weeks to get set up.

In order to access your pension, you would need to have reached age 55 (increasing to age 57 from 2028 for all plans set up after 12 February 2021.)

There are a number of options when taking money from a pension:

  • Annuity – this is where you use your pension pot to buy a guaranteed income from an insurer and you receive an income for life.

  • Flexi access Drawdown – 25% is usually tax free with the remaining pot being taxable. The funds placed in drawdown remain invested throughout retirement, you can take as much or as little as you need. You can take just the tax-free cash and then ad hoc income as needed or set up a regular income.

  • Take small cash sums – this is also known as an Uncrystallised Fund Pension Lump Sum this will be a withdrawal where 25% is tax free and the remainder is taxable.

  • Take your whole pot as cash – once you reach retirement age you can do this, however this could mean that you pay a higher rate of tax than normal or have no funds available in retirement.

Releasing tax free cash and income can take up to 8 weeks from my experience and will depend on the timescale of the Pension provider, I would say it would be best to contact the provider direct to request details of their current timescales.

As you are considering taking money from your pension, this would be the perfect time to speak to a Financial Planner to discuss your goals and objectives for retirement. This would allow you to review your existing investments and whether these are suitable for your requirements. It would also allow you discuss all of the options available, to establish the level of income you require in retirement, the most tax efficient way of generating this income and whether it is sustainable throughout your retirement.

Alternatively, if you are over age 50 you can book an appointment for free and impartial government guidance through Pension wise and can find more information on their website https://www.pensionwise.gov.uk/en

By necessity, this briefing can only provide a short overview and it is essential to seek professional financial advice before applying the contents of this article. This briefing does not constitute advice or a recommendation.

Answered by

Cecilia Reilly

Financial Planning Consultant

I studied Law and Taxation in Ireland for four years and graduated from Limerick Institute of Technology in November 2011 at which point I moved back to the UK. I started my career in Financial Services in the South East in 2012 and have had various roles over the years from Administrator for Pensions and Employee Benefits to Paraplanning and finally qualifying as a Financial Adviser. I received the Diploma in Regulated Financial Planning in 2017 and have been advising since 2018. I am working towards Chartered status and have completed additional exams in Pension Transfers, Pension Planning and Long Term Care.