Options for using your pension pot

There’s no one ‘right’ answer so take a look at all the options to see what might be best for you.

Get a guaranteed income for life (Pension Annuity)

You could be paid a guaranteed amount every month,  or year for life, so you'll always know exactly how much you're getting.

Download our Key Features

  • Take up to 25% of your pot as a tax-free lump sum
  • Use the rest to buy a guaranteed regular income for life

  • Choices include a fixed or increasing income and how often it’s paid

     

 

Are you transferring from a drawdown plan?

If you are transferring from a drawdown plan, there won’t be any additional tax-free cash payable from that pot. Tax-free cash is only payable from savings you’ve not yet accessed. If you’re unsure, please contact your current provider .

Have a flexible income – pension drawdown

Pension drawdown, is a way of taking money out of your pension to live on in retirement. You have to be aged 55 or over and have a defined contribution pension to access your money in this way. While your money remains invested its value can fall as well as rise. A pension drawdown is worth considering if....

 
  • You want your money to continue to be invested
  • You want the flexibility to take sums out as and when you want 
  • You want to take out different amounts each year

 

 

 

 

How does Flexible drawdown work?

You could take money from your pension pot as and when you need it, while keeping it invested. This may be in the same investments you had for your pension or it could be different investment funds. You can then take money out (drawdown) when it suits you. The more money you take out, the quicker your pot will run out. If you change your mind at a later stage and want a guaranteed income, then you could use whatever remains in the pot to buy an annuity or another suitable product.


 

 

 

 

Cashing in your pension pot

Take up to 25% from your pension pot tax-free. The rest is counted as income in the year you take it, so you need to be careful, otherwise you could end up paying more in tax than you might need to. Ouch!

  • Take up to 25% of your pension pot in tax-free lump sums

  • The remainder is treated as taxable income so you need to be careful you don’t become eligible to pay more tax than you might need to
  • You’ll need to consider a suitable home for your pension savings once you’ve taken them all as cash

Next steps

You've gained a quick overview, above. Let us help you fill in some details.

Next steps

Need some help?

Making decisions about financing your retirement is important so it’s worth shopping around and using available guidance and advice, before you buy:

Retirement guidance

Pension wise

The Government’s impartial retirement guidance will help you avoid the risks and think about what’s right for you.

Find out more about a Pension Annuity

Learn more about the features of our Pension Annuity and answers to common questions.

Get advice

Connect to an independent financial adviser in your area through Unbiased.