Crystallise

What does crystallise mean?

Crystallising your pension means starting to access it. Before you crystallise, your pension is just a pot of money growing. When you crystallise, you convert some or all of it into accessible funds—either taking your tax-free lump sum, moving money into drawdown, or buying an annuity.

Do you have to crystallise everything at once?

No. You can crystallise in stages. For example, you might crystallise £50,000 of a £200,000 pension at age 57, take £12,500 tax-free, and leave the rest invested. The remaining £150,000 stays “uncrystallised” until you decide to access it.

This flexibility helps with tax planning—you can control how much taxable income you take each year.

What happens when you crystallise?

• 25% becomes available tax-free
• The rest goes into drawdown or buys an annuity
• Withdrawals from the taxable portion are taxed as income

Why does the term matter?

You’ll see it on pension statements and when arranging withdrawals. Knowing the difference between crystallised and uncrystallised helps you understand what’s been accessed and what’s still growing untouched.

Key points

• Starting to access your pension – taking cash or income
• Can do it in stages – don’t have to crystallise everything
• 25% of what you crystallise is tax-free
• Rest is taxed when withdrawn