I have three different pensions. What's the best way to take my lump sums to cut tax?

In our weekly series, readers can email any questions about their finances to be answered by our expert, Rosie Hooper. Rosie is a chartered financial planner at Quilter Cheviot and has worked in financial services for 25 years. If you have a question for her, email us at money@inews.co.uk.

Question: I am 63 and I have three pension pots with £300,000, £150,000 and £20,000 respectively in them. What is the best way for me to take my lump sums from each if I want to retire at 65?

Answer: In simple terms, when you access pension funds for the first time, you can usually take up to 25 per cent of the amount as tax-free cash, up to the value of £268,275 for most people. When you take money from a specific pension, it moves from being what’s called “uncrystallised” to “crystallised” in industry jargon.

But you don’t have to crystallise all your different pensions at once (more on that later.)

What you can do is take tax-free cash from one pension now and access your other pensions at different times, rather than having to take benefits from all three pensions, or the full £470,000, in one go.