Understand your options

What are your options?

To help you navigate the different routes to retirement, we’ve summarised how each option works and some of the things you need to consider.

Retirement options

When thinking about your retirement options you need to consider your personal circumstances, your lifestyle and your health as these are all factors that will influence the type of income option that best suits your needs.

Note that some contracts may restrict the retirement options available to you.

You can start taking pensions benefits when you're 55 (increasing to 57 on 6th April 2028), in one or more of the following ways:

Take it as a cash lump sum

Expand

You can take some or all of your pension pot as cash and there are three different ways to do this:

Full lump sum Partial lump sum Small pots

Set up a flexible regular income

Expand

A drawdown pension lets you keep your money invested and still take an income or a lump sum when you need to. You can also take up to 25% as a tax-free cash lump sum.

Flexi-access drawdown

Set up a guaranteed regular income

Expand

To make sure you get an income for life, you can buy an annuity. You can also take up to 25% as a tax-free cash lump sum with this option.

Annuity

Combine multiple options

Expand

You’ll also have the flexibility to blend options. This may give you the exact balance of flexibility and security that you may be looking for.

Create a combined plan

Wait and decide later

Expand

Being proactive about your retirement is important, but there’s no need to rush your decisions either. There’s a lot to consider, particularly as you have more choice than ever before. You may decide that it’s best to leave your pension invested until you need it.

Wait and decide later

What income could your savings get you?

See your potential income from the different options.
We use these assumptions to create your forecast.

Compare your options	Cash lump sum	Annuity	Flexible income drawdown
You get a guaranteed income for life	✕No	✔Yes	✕No
You can pass funds on to your beneficiaries when you die	✔Yes	Available at an additional cost	✔Yes
You can adjust your income when you need to	✔Yes	✕No	✔Yes
You can keep paying into a pension fund	✔Yes	✔Yes	✔Yes
Your money is protected against inflation	✕No	Available at an additional cost	✕No
Your money has the potential to grow but could also fall in value	✔Yes	✕No	✔Yes
You know how much regular income you'll receive	✕No	✔Yes	✕No
You can take a lump sum of cash after you take an income	✔Yes	✕No	✔Yes

Things to consider

The tax treatment depends on your individual circumstances. Your circumstances and tax rules may change in the future. Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed, and can go down as well as up. The value of your plan could fall below the amount(s) paid in.

If you decide to retire early and withdraw your pension savings before the retirement date you selected on your pension plan, you should check with your provider to see what if any charges apply.

If you’ve been contributing to a ‘with-profits’ investment fund and choose to cash it in before the agreed date, some providers may apply what’s known as a ‘market value reduction’ (MVR), ‘market value adjustment’ (MVA) or smoothing adjustments. This is designed to ensure you don’t get more than your fair share from the investment. Check your policy documents or contact your provider, to see if this applies to you.

Some older pension plans offer a guaranteed annuity rate. If you have this benefit, it means your plan guarantees to pay a particular annuity rate even if the market rate is different. This means you could get a much higher pension. Check your policy documents or contact your provider, to see if this applies to you.

If you're unsure of the best option, we recommend you speak to a financial adviser. There may be a charge for this.

Next Get help and guidance

Your Retirement Planner

Get prepared