Most people reach retirement with money in more than one place. How you draw from each can affect how much tax you pay and how long your money lasts.
The basics
Pensions usually let you take 25% tax-free. The rest is taxed as income when you draw it. ISAs can be withdrawn at any time with no tax to pay.
Why the mix matters
- Drawing from both can help you stay within lower tax bands
- ISAs give you flexibility for one-off costs without a tax bill
- From April 2027, unused pensions are due to count for inheritance tax, which may change the order that makes sense
No single right answerThe best approach depends on your income needs, your other assets and what you want to pass on.
Plan it, then review it
We build the drawdown order into your cashflow plan and revisit it each year, as tax rules and your circumstances change.
Last reviewed 29th September 2026. This is for general information only and isn’t personal financial advice. Tax rules can change, and how they apply depends on your circumstances. The value of investments can go down as well as up, so you could get back less than you put in.
