In our weekly series, readers can email in with any question about retirement and pension savings to be answered by our expert, Rachel Vahey, head of public policy at investment platform AJ Bell. There is nothing she does not know about pensions. If you have a question for her, email us at money@theipaper.com.

Question: I’m 63 years old, and in 2025 I took a tax free lump sum of £40,000 from a small defined benefit (DB) pension while I was working part-time. I’m now planning to fully retire this year when I will start to draw down on my self-invested personal pension (SIPP). In the application it asks about any lump sum allowance already used up. Is this as simple as getting my DB scheme to provide confirmation that I used £40,000 of my lump sum to date?

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Answer: Retirement was once a straightforward shift from full-time work to complete exit. Now, many people transition by moving to part-time roles before retiring fully.

And as culture has shifted, the pension rules have also changed to allow more flexibility to make sure people’s pension income can match what they need for this new-style retirement glide path. However, there are still some limitations to be aware of.

Most people can take 25 per cent of their pension tax-free up to a maximum of £268,275 from all their pensions – this is called the lump sum allowance (LSA).

To make sure you don’t exceed that limit, when you request a new amount of tax-free cash, pension providers will ask you for details of how much tax-free cash you have already taken from all your pensions.

It’s always best to check with your pension provider, but often you will just have to declare how much tax-free cash you have taken and give them details such as the name of the pension scheme, when you took the tax-free cash, and exactly how much it was.

Often you would have received this information at the time, but if you don’t have it, you can request it from your old pension scheme. Usually, you shouldn’t have to forward this evidence to the SIPP provider, but it makes sense that you keep your own records of how much money you have received from all your pensions.

You will then be able to take up to 25 per cent of your SIPP pension pot as tax-free cash, as long as that doesn’t exceed the amount of LSA you have remaining. For example, if you have already taken £40,000 in tax-free cash, you should have a remaining allowance of £228,275.

The remaining 75 per cent of the SIPP pension pot will move into drawdown, and you can then take a taxed income from that fund. You don’t have to commit to a level of payment – you can choose what to take and when to take it. Alternatively, you could use it to buy an annuity – which is a guaranteed payment for the rest of your life.

Remember, you don’t have to make a decision on the whole of your SIPP pension pot. You could decide to use only part of your pension pot, and take up to 25 per cent of that amount as a tax-free lump sum.

Working out tax-free cash from a defined benefit scheme – such as your old scheme – is usually trickier. Most private pension defined benefit schemes work on the basis that you can exchange part of your monthly pension for a tax-free cash amount.

For example, they may offer £20 in tax-free cash for every £1 of income you give up. Whether this is going to present a good deal for you would depend on the exact ratio they offer, plus your personal circumstances.

As I said before, tax-free cash is usually 25 per cent of the pension pot, up to the LSA of £268,275. However, some people may be entitled to a higher amount.

This could be because in the past they have registered for lifetime allowance protection – for example fixed protection or individual protection – or because they were entitled to a higher percentage of tax-free cash under their pension scheme’s rules before April 2006.

If you fall into either of these categories, you should tell your pension provider, as this could affect the amount of tax-free cash you are entitled to.