Taking money out of a NOW: Pensions pot

You can take money out of NOW: Pensions as one cash payment or in chunks, usually from age 55 (57 from 6 April 2028), but NOW does not offer drawdown or annuities.

That is how NOW's own member guide describes it. Free, impartial guidance on the choice comes from Pension Wise, part of government-backed MoneyHelper, and NOW's guide says you will be asked whether you have used it. Your NOW pot can be looked at beside your other savings by an FCA-authorised adviser without a fee. Only contact details are collected by the form on this page, so it takes a minute.

What can you do with a NOW: Pensions pot?

NOW's retirement options page sets out three routes inside the scheme. You can leave the pot where it is: "There's no rush. You can leave your now:pensions savings where they are for now and plan to take them at a later date." You can take all of it as cash. Or you can take some of it, a chunk at a time.

Two familiar routes sit outside the scheme. NOW says it "doesn't currently offer annuities" and "doesn't currently offer flexible income", the usual name for pension drawdown. Wanting either means moving the pot to another provider, which is the subject of transferring out of NOW: Pensions.

Where the pot sits until then matters too. Unless you chose otherwise, the money sits in the lump sum plan; NOW's investment options explains how that plan behaves as retirement nears.

Taking cash in chunks: the limits

NOW sets three conditions. You must "have at least £1,510 in your now:pensions account", "take at least £10 in each chunk" and "leave at least £1,500 in your account". Only one chunk can be requested at a time, and only once a calendar month.

The money left behind stays invested, so it could grow but could also go down in value, and you may get back less than was paid in. NOW's guide says it suits some people who "only need a small amount of cash now". For how such payments are classed, see flexi-access drawdown against UFPLS.

How much of a NOW: Pensions payment is tax free?

NOW says a quarter (25%) is usually the tax-free share, with the remainder counted as income for the tax year. That holds whether you take everything at once or a chunk. NOW also says: "you can't pay tax-free cash back in to your pension savings", so an amount taken cannot simply be returned if you change your mind.

A lump sum allowance caps the tax-free cash you can have from every pension you hold combined. NOW gives it as £268,275, with tax due on tax-free cash above that figure. People with certain protections may be entitled to a different tax-free amount; whether you hold one is something an adviser can check for free if you ask on a call-back.

NOW works out the income tax and pays it to HMRC before paying you, adding that it "may not take the right amount of tax, as we don't know about any other income you get". HMRC checks after 5 April and contacts you if the amount was wrong. For the mechanics of the quarter, see how to take the tax-free lump sum.

Pots of £10,000 or less

NOW's retirement options page says that if everything you hold in NOW: Pensions is worth £10,000 or less, you can take it as cash all at once without the money purchase annual allowance applying. Even then, the tax-free part is usually a quarter.

Taking a chunk is different: NOW's guide says the money purchase annual allowance then applies, whatever the pot size. That cuts what you and your employer can pay in with tax relief to £10,000 a year. NOW then supplies a certificate for your other pension providers, which must be sent within 90 days. The wider rules are on small pot pension rules. Weighing a NOW cash payment against your other pensions is easier with someone who sees all of them, and the quick call-back form here sets that up at no cost, through an FCA-authorised adviser.

Asking NOW to pay you

NOW's guide says that when you ask to take money out, it must check who you are. One document is enough: a current passport or driving licence, or a birth certificate, in the name NOW holds for you. NOW asks for originals by recorded delivery and says it returns them "by recorded delivery within five working days"; certified copies are also accepted. Proof of address is needed too: an original, dated within six months.

NOW's guide asks you to consider what you will live on, when your State Pension arrives and how a payment could affect tax and income-related benefits such as Universal Credit. It also warns that cash could affect debt repayment plans. How a request is started and how many days payment takes after that are best put to NOW directly, or to an adviser if you request that free call-back; how long cashing in a pension takes covers the general picture.

Withdrawing from NOW: Pensions before 55

The lowest age you can usually start taking a pension is 55, rising to 57 on 6 April 2028, according to NOW's guide. NOW's guide says earlier access needs you to qualify on grounds of ill health, covered on cashing in a pension because of ill health. NOW lists as a scam warning sign any claim that you can reach your savings before 55 without paying large amounts of tax: "You can't." The consequences of taking money early are on early withdrawal penalties, and pension scams shows the tactics to watch for.

If you want income rather than cash

Someone who wants a guaranteed income for life, or who wants to leave the money invested and draw it as they please, would need to move the pot, since NOW offers neither. NOW's guide says you can usually take up to a quarter as tax-free cash before you transfer out the rest. Whether that suits you depends on the receiving provider's charges and investments, and the value of investments can fall as well as rise. Annuity or drawdown sets out what to weigh.

Smaller points about getting money out of NOW

Can I combine cash with another option?

Yes. NOW's guide says you are not restricted to one way of taking your money and can combine options or take them at different times.

Will NOW ask whether I have used Pension Wise?

NOW's guide says you will be asked whether you have taken Pension Wise guidance and recommends it.

Do I have to wait until April to reclaim tax NOW overcharged?

No. NOW's guide says an overpayment can be claimed back without waiting for the tax year to end.

Does taking cash affect what I can pay in?

It can. NOW's pensions and tax page says the money purchase annual allowance usually applies if you take cash other than tax-free cash, cutting tax-relieved contributions to £10,000 a year, with the small-pot exception above.

Can I take my NOW: Pensions money as a regular income?

Not within NOW, which offers no flexible income. Cash in chunks, at most once a month, is the closest option inside the scheme.

Before you ask NOW for the money

The usual questions are how much cash you need, what the tax will be and whether the rest should stay put. If any of those depend on other pensions or on benefits, it helps to speak to someone with the full picture. That is where time with an FCA-authorised adviser earns its keep, and a no-cost call-back is a few details away in the enquiry form here.