How to take money out of a Prudential pension

Prudential pension withdrawal runs through its own forms: one for a drawdown plan, another to take a pot as cash, with tax, charges and timing explained.

Impartial, free guidance on the choices comes from Pension Wise, and it is worth using before any money leaves the plan. Prudential's pot is one piece of your retirement money, and an FCA-authorised adviser can review the lot in a single conversation. To get that call without paying, use the form on this page.

Which ways of taking money out does Prudential list?

Prudential's Retirement Account guide gives three main routes and says "Whichever option you chose you can normally take 25% tax-free cash. The rest of the money is then usually subject to tax." They are drawdown, a guaranteed income for life (an annuity), and some or all of your savings as cash. You can combine them, or take no income for now.

The account has a savings side and an income side, the Pension Income Account, which is where money you start drawing sits. The guide gives the usual start age as 55, rising to 57 from 2028; pension at 55 covers protected ages and other exceptions.

The separate Guaranteed Income Plan is "not available direct to customers". The other routes differ in flexibility. Drawdown lets you "dip into your plan as and when you need to or take a regular income", whereas with an annuity "regular payments will be set up at the start of the plan"; the guide adds that taking money in stages may mean moving it to a new plan. How each works generally is on the drawdown and annuity pages.

How do you withdraw from a Prudential drawdown plan?

Prudential has a form for withdrawals from a drawdown plan. You tick a one-off payment or a regular one (monthly, quarterly, half-yearly or yearly), give an amount for each plan number, and may name funds; otherwise the money is taken across all your funds in proportion.

Further sections cover a start date, bank details (an account in your own name or a joint account you hold) and a signature. One section is for a financial adviser to complete, with a box recording whether advice was given. Completed forms are posted to Prudential's Flexible Retirement Income Servicing Team, and an overseas account needs a further Global Disbursements form.

Amounts on the form are before tax. A higher withdrawal can shrink the pot faster, so read how much drawdown to take first; Prudential's guide notes that "Taking out too much money may leave you without enough to live on in your retirement."

Taking a Prudential pot as cash: what the form involves

For an individual pension Prudential uses a "Return of Funds" form, which asks whether you have used Pension Wise and warns that the choice is final once taken, so settle your questions before posting it. Anyone with a terminal illness who believes their life span is less than 12 months is asked to phone Prudential to talk through the options rather than complete it.

A fund of £10,000 or less may qualify as a small lump sum, but limits apply. The form says "You are allowed a maximum of three small lump sum payments and each payment must not have exceeded £2,000 if paid before 27 March 2014, or £10,000 if paid after that date." Where you are not eligible, the form treats completion as an instruction to pay an uncrystallised funds pension lump sum (UFPLS) unless you tick No, and warns you "will be subject to the money purchase annual allowance (MPAA)". The rules are explained in small pot pension rules, flexi-access drawdown and UFPLS and the money purchase annual allowance.

Prudential must verify your identity before paying, so the form asks for two documents, one proving name and date of birth and another proving name and address. For questions, its phone line is 0345 640 2000 (select Withdrawal).

When does the money arrive?

For drawdown, the form suggests today's date as the start date if you want the money soon, then adds: "However, please be aware that it may take up to three weeks before you receive this withdrawal." On the cash form, timing affects the amount: "The value of your fund may vary depending on when your completed form is received." If Prudential cannot verify the bank details you give, that form says a cheque may be sent to your address on record instead.

How is a Prudential withdrawal taxed?

On lump sums the guide says "You will receive the first 25% of each withdrawal, tax-free, but you may have to pay income tax on the remaining 75% of each withdrawal." With drawdown the first 25% is usually tax-free and income tax may apply to later amounts; a big sum can lift your income into a higher band. Your own tax depends on your income that year, so the call-back form here gives a free chance to talk it through with an adviser.

Prudential's drawdown form warns that lump sums may be taxed on an emergency basis, meaning "the payment will not take account of your actual tax position and you could end up overpaying tax by a significant amount", with the refund claimed from HMRC. See pension tax refunds, and pension withdrawal for the general rules on cashing in a pot.

Whatever you take, Prudential's guide says "The value of your investment can go down as well as up so you might not get back the amount you put in."

Does Prudential charge for taking money out?

Two costs show up on the forms. On the cash form, a payment direct to an overseas account costs £25, taken from your net payment. And for someone invested in the With-Profits Fund who takes benefits before their selected retirement date, Prudential "may apply a market value reduction (MVR) which will reduce the value of my fund"; the Prudential with-profits fund page covers that fund. Cashing in also gives up any valuable guarantee on the plan that only an annuity provides, the cash form warns. Anything else that applies to your plan on exit varies, so an adviser can go through it for nothing after a request through this page.

Running costs inside the plan are a separate topic: see pension charges.

Prudential withdrawal paperwork: common queries

Is the Prudential withdrawal form online?

Partly. The Return of Funds form can be typed in and sent through Prudential's online service at pru.co.uk/online, or printed and posted; the drawdown form is completed by hand and posted.

What is the Prudential Pension Income Account?

It is the side of the Retirement Account that you draw from. Money is paid in through the other side, the Pension Savings Account.

Do I need an adviser to take money out?

Not to complete either form, though the drawdown form has a section for an adviser's details and the cash form asks about Pension Wise. The Guaranteed Income Plan is different, as only an adviser can recommend and set it up.

Can cashing in a Prudential pension affect my benefits?

It can. The Return of Funds declaration says taking your fund as cash may affect means-tested benefits such as housing benefit and Pension Credit.

Could taking money out affect other pensions I hold?

Possibly, through the annual allowance and tax. Compare options before you decide, using Pension Wise or an FCA-authorised adviser; leaving your details in the quote form here is the quickest way to arrange the adviser's call.