What are my options at retirement from a pension plan?
Updated 12 October 2015
You can normally take pension benefits as:
- a tax-free lump sum together with a drawdown pension or an annuity. This is normally up to 25% of the value of the benefits you’re taking at the time, but may be more or less than this depending on your circumstances and also subject to any lifetime allowance restrictions.
- a drawdown pension
- an annuity
- a cash lump sum known as an uncrystallised funds pension lump sum
- a combination of the above
You can normally start taking pension benefits from the age of 55. You can only take pension benefits earlier than this if you have a protected pension age or if you’re in ill health.
Drawdown pension: A drawdown pension lets you take income from your pension while it’s still invested. Retiready doesn't currently offer a drawdown pension option.
An annuity: An annuity gives you a regular retirement income for the rest of your life. You buy an annuity with the balance of your pension savings, after you’ve taken any tax-free cash. You can buy an annuity on the open market with the money you've saved, but you don’t have to.
An uncrystallised funds pension lump sum: An uncrystallised funds pension lump sum (UFPLS) is an ad hoc lump sum drawn from an uncrystallised defined contribution pension pot. Typically, 25% of the lump sum will be tax free with the remainder being subject to income tax. You can find out more or apply for UFPLS at Your Retirement Planner.