The Meaningful Money Personal Finance Podcast · Wednesday, August 5, 2026
James inquired about using pension funds to purchase an annuity and accessing the 25% tax-free cash. Pete Matthew clarified that funds must be 'crystallised' into a specific pot to buy an annuity, and the 25% tax-free element applies to that specific crystallised amount. He emphasized that the remaining funds in the pension pot continue to grow tax-deferred and are not accessible as cash until later stages.
“you've got to make sure that you've got enough of your pension that you're holding in a crystallised state.”
“So, you know, you said you've got 600,000 pounds. If you want to use 100,000 pounds of that to buy an annuity, then you've got to crystallize that 100,000 pounds.”
“So, you know, you're not going to get that 25% tax free cash. So, yeah, I think you you've asked your question really well, but I think there are some misunderstandings in there.”