There are some payments pension providers make that you’ll pay up to 55% tax on. These are called ‘unauthorised payments’.
Unauthorised payments include:
- most lump sums over 25% of your pension pot (you pay 55% tax on these)
- lump sums that don’t meet the rules for taking smaller pension funds as lump sums
- any payments before you’re 55, unless you have the right under your pension scheme
- regular payments after you’ve died
Some companies advertise personal loans or cash advances if you take your pension early. These payments are unauthorised and you have to pay tax on them.