Let’s assume you have a standard pot of pension assets, e.g. in a personal pension. You could take the tax free cash (or not), then:
- Buy a pension annuity
- Including options such as spouse’s income, level or increasing income, payable monthly or annually, any guaranteed period, or even alternative annuities that move away from the conventional options.
- Take the pension into capped drawdown
- Choosing between 0% and 100% of the maximum income allowable, e.g. you could take no income. Your assets then remain invested in your personal pension.
- Take the pension into flexible drawdown
- If you have secure pension income of £20,000 per annum or more you can choose this option and take any amount of money from your pension at any time, e.g. you could take it all in one go.
Tax considerations always need to be taken into account and the risk associated with different options must also be appreciated. But the pension rules are slowly changing to make them much more flexible for people upon retirement.