Retirement options

Your retirement options

A simple breakdown of your three main retirement options,
from the UK's most trusted retirement provider.**

Important: The information on our website is not personal advice but we can offer advice if specifically requested. What you do with your pension is an important decision, which could be irreversible. Drawdown is a more complex option than an annuity. Make sure you understand your options and check they are suitable for your circumstances: take appropriate advice or guidance if you are unsure. The Government's free Pension Wise service can help. It provides impartial guidance face-to-face, online or by phone - more on Pension Wise.

There may be more flexibility with your pension than you think. From age 55 you will normally have an opportunity to take 25% of the fund as tax-free cash and a choice over how to take the rest, which is taxable. The options below are the three main ways to take a regular income following the new rules which came into effect in April 2015. Or you can take lump sums directly, 25% usually tax free. Find out more about the new rules »

What are my income options

Secure income (Annuity) Income security:	Mix and match Income security:	Flexible income (Drawdown) Income security:
All options provide up to 25% tax free cash, income is taxable
A secure income is paid for the rest of your life, income will never run out.	Use a blend of secure and variable income. You decide how to mix and match your income.	A variable income allows you to draw money directly from your pension.
Regular payments will be made directly into your bank account for life - you don’t need to do a thing once it's set up.	Most people will want some kind of secure income to cover basic costs and bills.	You remain in control, and choose where to invest. This may be an advantage for some, but could be a worry for others.
You can shop around at the start to find a better lifelong income, and could use your, and potentially your spouse's or partner's, health conditions and lifestyle to boost income further.	The rest of the pension can be used to provide a variable income, with peace of mind that essential costs will be met.	You choose how much income you take, directly from the fund.
At the start, you can make provision for a spouse or partner if you die first, or include an annuity that keeps pace with inflation.	You can choose the blend of secure and variable income that is right for you.	You keep options open, including what happens to the pension when you die.
Income is inflexible: the guaranteed nature means it can’t usually be changed once set up.	Only some of your income is secure, the remaining income is not guaranteed and could run out.	Income is not secure. This is a high risk option which requires regular review.
It can't take account of changing circumstances, and if you've chosen a fixed income this has no protection from inflation.	The secure part is inflexible and can't usually be changed, or take account of changing circumstances.	You could run out of money if you take too much out, your investments perform poorly, or you live longer than expected.
More about annuities	To find out more please call 0117 314 1798	More about drawdown

Compare the options in greater detail

	Take a secure income for life	Mix and match secure and variable income	Flexible income directly from your pension
Why should I consider this option?	If you need some form of secure income. This is one of the few ways of providing a guaranteed income for life. However once set up, this option cannot usually be changed.	If you want secure income to cover your essential costs and flexibility with the rest. The flexible part of your income could fall as your fund remains invested and is therefore subject to the ups and downs of the market. The secure part can't usually be changed.	If you don't need a secure income yet and want to keep your options open. Income could fall as your fund remains invested and is therefore subject to the ups and downs of the market.
Can you take tax-free cash?	Yes - usually up to 25%	Yes - usually up to 25%	Yes - usually up to 25%
What happens to the rest of the pension?	You convert it into secure income, for life.	You convert some into a secure income for life. The rest remains invested and you can draw any additional income you want directly from your fund.	Your pension fund remains invested and you draw an income directly from your fund
Can you take additional lump sums as you go?	No	Yes from the flexible part, but be aware this will leave less invested for your future income. No from the secure part.	Yes - but be aware this will leave less invested for your future income.
Is income secure?	Yes	Yes, the secure part is. The flexible part is not secure.	No
Might this income run out later in retirement?	No - it's paid for life	The secure part is paid for life, with no reviews required. The flexible part could run out.	Yes
Do you retain control over the pension? Do you need to review regularly?	No	Yes, you retain control over the flexible part. You do not retain control over the secure part. The flexible part requires ongoing reviews, while the secure part does not need to be reviewed.	Yes
What happens to the pension when you die?	Nothing payable, unless you have chosen a spouse's pension, guarantee period or value protection option at outset. If you have chosen one or more of these options and you die before 75 this can usually be paid out tax free.	The remaining flexible pension can be used to provide an annuity or drawdown for your dependent or nominated beneficiaries or the fund can be paid out as a lump sum. If you die before the age of 75 this can usually be paid out tax free. If you die after the age of 75 then this will be subject to income tax, or a 45% tax charge if taken as a one-off lump sum. Please remember tax rules may change in the future. See what happens if you die in income drawdown »
Do you need to decide on the death benefits now?	Yes	Yes for the secure part. No for the flexible part - you can keep your options open.	No - you keep your options open.
What are the downsides?	Can be inflexible: the secure income cannot usually be amended so it is important to consider your options carefully. Annuity rates can change regularly and may go up and down in future, but once set up your annuity is fixed for life.	This option has the same downsides as the secure and flexible income downsides shown to the left and right.	Drawing income in this way is a more complex and higher risk option than an annuity. Income is not secure and excessive withdrawals or poor investment performance will deplete your fund, reducing your income later in life.
	Find out how to take a secure income for life with an annuity More about annuities	To find out more please call 0117 314 1798	Find out how to draw directly from your pension with income drawdown More about drawdown

Please note that drawdown involves a full fund transfer to the HL Vantage SIPP. Some pension scheme rules may not allow you to perform this transfer. If you have any valuable benefits such as protected tax free cash or defined benefit underpins such as GMP (Guaranteed Minimum Pension), you may lose these upon transferring. We therefore recommend you contact your pension scheme administrators to check before requesting a Drawdown illustration.

**We are the UK's largest drawdown provider for clients making their own investment decisions (Money Management survey). We are the UK's largest annuity broker and have been for 13 years running (Equifax Touchstone).