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Your pension when you turn 75 | All you need to know

Updated: 21.09.26

By Neil Marsden

This content was factually correct when written but may not reflect current developments or information.

Pension considerations for those approaching 75

Turning 75 is often considered to be a milestone. Some people think of it as the last “big” birthday before becoming a centenarian. But it can also be an administrative milestone when it comes to your finances – and for your pension, specifically. For pensions, the significance of this date decreased in many ways a few years ago when legislative reforms meant you no longer had to buy an annuity on your 75th birthday if you hadn’t already started to take your pension benefits. But there are still some things you should be aware of as you approach the big day.

What happens to your drawdown pension and death benefits at 75?

One of the biggest pension changes at 75 is not necessarily how you take retirement income. It is how your remaining pension may be taxed if you die and leave it to your beneficiaries.

If you die before 75, and the value of your pensions does not exceed £1,073,100 (the Lump Sum and Death Benefit Allowance) your beneficiaries can usually inherit money left in a drawdown pension without paying Income Tax on withdrawals, provided the payment meets the relevant pension rules.

If you die after this age, the position changes. Any money your beneficiaries withdraw from an inherited drawdown pension may be taxed at the same rate as their income, potentially as much as the additional rate of 45%, or an effective rate of 60% for total income between £100,000 and £125,140 (Personal Allowance Taper), depending on their circumstances. The same would apply if you died under the age of 75 if you had any pension benefits exceeding £1,073,100 (but only on the excess). This can make a significant difference, especially where a beneficiary is a higher-rate or additional-rate taxpayer or withdraws a large amount in one tax year. Of particular concern is when a beneficiary’s withdrawal, when added to their income, takes them over the £100,000 personal allowance taper.

The rules are also changing from 6th April 2027. From that date, most unused pension funds and pension death benefits are due to be brought into a person’s estate for Inheritance Tax purposes. This does not mean everyone’s pension will create an Inheritance Tax bill, but it does mean death benefit planning will need closer attention.

If you are approaching 75, it is sensible to review your pension arrangements, your retirement income plan, and your Expression of Wish form. An Expression of Wish is not a way to avoid tax, but it helps your pension provider understand who you would like to receive any remaining benefits. It should be kept up to date, particularly after a marriage, divorce, bereavement, the birth of a child, or a major change in family circumstances. Without an Expression of Wish in place, the usual approach is to offer beneficiaries (once identified) lump sum withdrawal only, which can have significant income tax issues.

Do I have to buy an annuity when I turn 75?

Under the law, no you don’t. But, although the legislation around pensions has been modernised over the past decade, that doesn’t mean that all pension providers have updated their products. So if your pension hasn’t incorporated the latest flexibilities into its rules, you might find yourself having to buy an annuity (i.e., a monthly income for life) when you hit 75.It’s important to take steps before then to understand how your own pension works, as it might be the case that moving it somewhere else before your 75th birthday could increase your options. This is where it’s important to understand all your options and take advice if you are unsure.

Read more: Retirement planning

Will I have to pay a lifetime allowance penalty?

Up until 5th April 2024, there was a limit on the amount of pension benefit that can be drawn from pension schemes – whether lump sums or retirement income. This Lifetime Allowance (LTA) was tested each time you access a pension benefit, with a final test carried out at age 75 (against both your drawn and undrawn benefits). Up until 5th April 2023, if the value of all of your pension benefits, across all schemes, exceeded the LTA, any excess would have attracted a tax charge of 25% if it was withdrawn as an income (for example from an annuity or a drawdown arrangement) or 55% if it was withdrawn as a cash lump sum. The March 2023 Budget confirmed that the LTA excess tax charge would not be applied in the 2023/24 tax year, and the LTA itself will be abolished on 5th April 2024. 

Making additional contributions

You get tax relief on contributions you make into your pension – but this relief applies only until you turn 75. If you want to make any top-up payments it’s sensible to consider making them before your 75th birthday, although bear in mind that if you are not earning your annual contributions are limited to £3,600 gross. 

What are pension providers’ rules?

Although legislation in recent years means that pension obligations have been relaxed, that doesn’t mean that the rules surrounding your own pension have been updated. If the terms that were in place when you started your pension haven’t been updated, it might mean you’re still bound by the rules you signed up for many years ago (such as with tax-free lumps sums as already mentioned).You should check the small print to make sure that your pension provider lets you enjoy the full flexibility of the current legislative framework. If you’re unsure, consider taking independent financial advice.

Do you lose your tax-free cash at age 75?

No, you do not automatically lose your right to take tax-free cash at age 75. However, if you were to die after 75, any unused tax-free cash could be subject to taxation for your beneficiaries, as outlined above.

The concern surrounding age 75 and pensions often comes from the old Lifetime Allowance rules. Before the Lifetime Allowance was abolished, age 75 could trigger a check against the value of some pension savings, including pension funds that had not yet been accessed.

The rules changed on 6th April 2024, and the Lifetime Allowance no longer applies. Instead, tax-free lump sums are controlled by the Lump Sum Allowance.

For most people, the Lump Sum Allowance means you can usually take up to 25% of your pension as tax-free cash, capped at £268,275 across all your pensions. If you have already used some or all of your allowance, or if you have pension protection, your position may be different.

However, if you have an older pension, it may not offer the same flexibility. So, although the tax rules may allow you to take tax-free cash after 75, your pension provider’s own rules may affect what you can practically do.

Before making a decision, check how much of your Lump Sum Allowance you have used and whether your pension scheme allows the options you want.

Does your State Pension increase at age 80?

The State Pension increases each year from the date you start receiving it, for the rest of your life.

However, if you receive the old basic State Pension, you may also get the historic age addition when you reach 80. This is an additional 25p a week and has not increased over time, so it should not be treated as a meaningful increase in retirement income.

The new State Pension, introduced for people reaching State Pension age from 6th April 2016, does not include the age addition.

There is also a separate over-80 pension for some people who receive little or no basic State Pension. This can act as a top-up, but only if you meet the eligibility rules, including residency requirements.

For most people planning for retirement, private pensions, savings, investments, and later-life costs will matter much more than the age-80 increase. However, it is still worth knowing what you may be entitled to and checking the rules in advance.

Next steps

An independent financial adviser can help you identify anything you need to take care of as you approach your 75th birthday, as well as help you plan your retirement income. At Alan Boswell Financial Planners we take the time to talk you through any decisions that need to be made and outline your options based on your personal circumstances. For further information on pension advice and your retirement, contact our independent financial advisers on 01603 967967.

The value of investments and any income from them can go down as well as up and you might not get back the original amount invested. The past is not a guide to the future. The value of tax benefits depends on your individual circumstances. Tax laws can change.

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Whether you need a pension, have a general enquiry, or want to talk it through over the phone, we're here to help.

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