From age 55, you will be able to take your whole pension as a lump sum

From April 2015, you can now take the whole of your private pension as a lump sum if you wish.

The first 25% of your pension fund can usually be taken as tax-free cash, to spend or save as you want. Most people will be able to take tax-free cash from age 55.

The rest of your pension will be subject to income tax at your highest marginal rate. So if you are a basic rate tax-payer (paying 20% tax), the pension you take will be added to your income that year and this could push you into the higher (40%) or even top rate (45%) tax bracket.

There is the option to take the pension out in stages, rather than in one go, which could allow you to manage your tax liability.