Learn about accessing your pension pot

From 55, you can take some, or all, of your pot as a cash lump sum. Usually 25% of your lump sum will be tax-free and the remaining 75% will be taxed as income. Any money you leave will remain invested until you're ready to access your pot again.

Using a pot of £10,000 as an example, you could:

• take out all £10,000: £2,500 as a tax-free lump sum and the remaining £7,500 taxed as income, or
• take £2,000 every year for five years: £500 of each £2,000 payment can be tax-free, the remaining £1,500 is taxed as income
• take £5,000: £1,250 of it tax-free, £3,750 taxed as income, leaving the remaining £5,000 invested until you're ready to access more
• or choose another option to suit your circumstances

Learn more about tax.

Flexi-access drawdown is perhaps the most flexible way to access your pension money. This allows you to usually take up to 25% of your pot as a tax-free lump sum (for example, from a £30,000 pot you could take £7,500) while the rest of your pot stays invested.

You can then take a regular and / or occasional amounts as income for as long as your pot lasts. Legal & General won't charge you for this but a fee may apply with other providers.

Your pot will stay invested in the funds you've chosen until you take money out. If you want to change your investment funds, you can usually do this at any time, but you should check with your provider.

Staying invested means your pot may benefit from additional investment growth. This will help to build up your savings while you are taking out an income. It's important to know that the value of the investments that make up your pension pot can go down in value, as well as up.

How much is in your pension pot will depend on investment performance, as well as other factors such as: charges, the rate of inflation and how much money you take out.

When you take money from your pension pot, you will need to think about:

• how much you will need in the future
• if your contributions are going to continue
• how the charges could affect the value of your pot
• how your investments might perform
• what money you will need if you live longer than expected

Learn more about tax.

You can use some, or all, of your pension pot to buy an annuity, usually taking up to 25% of the amount selected as a tax-free cash sum. An annuity gives you a guaranteed income for life, or for a set number of years, depending on the type of annuity you buy.

Types of annuity

• A Lifetime Annuity will pay you a guaranteed income for the rest of your life.
• A Flexible Annuity will allow you to vary your income, perhaps a larger amount now, and a smaller one later on.
• A Fixed Term Annuity will provide you with a guaranteed income for a set number of years only.

You can also add other options like a pension for your spouse, partner or other financial dependents that will continue to be paid if you die before them. You could also choose your payments to increase each year, for example in line with inflation, or remain the same. Annuities can also be paid monthly, quarterly or even annually.

The income you get from an annuity is taxable and the amount of income your pension pot could buy might vary significantly. If you have any health or medical conditions, or relevant lifestyle factors such as smoking you may be entitled to a higher annuity income.  No single provider offers the best rate in all circumstances so it is important you shop around to choose the best option for you. Even if you don't qualify for a higher income with one provider, you might with others.

Learn more about tax.