There are different ways of taking money from your pension savings. Explore your options We understand there’s no single recipe for a successful retirement. And that your needs and goals could change as life unfolds. Before you decide how you’d like to access your pension savings, take some time to fully understand all your options. This is because you can’t always change your mind once some decisions have been made. From withdrawing cash to taking an income, our retirement guide covers some of the options available to you.

What are your retirement options? 

There are three main ways to access your pension savings – and you can choose one or any combination of these options. Your choices really depend on your own retirement plans, and the money you have invested in your pension plan. Spending time looking at your options now could help prepare you for a better retirement.

  • Pension drawdown Also known as ‘flexible access’. Take the money you need – whenever you need it.
  • Take cash,Have some or all of your savings paid as one, or more, cash lump sums.
  • Pension annuity Buy a guaranteed regular income, also called secure income, for the rest of your life.
    Not ready to access your pension savings?

The minimum age to retire is 55, increasing to 57 in 2028. Once you’ve reached 55, you can access your pension savings whenever the time is right for you. You can buy an annuity, dip in with pension drawdown or take it all as a cash lump sum.

And, if you need more time to consider your options, that’s fine too. You can choose to leave your money invested giving it more potential to grow, but it could go down in value too.Before deciding how you’d like to access your pension savings, it’s a good idea to take some time to fully understand all your options. That’s because when it comes to your money, the best decisions are usually carefully planned. In this guide, we’ll walk you through your retirement options. We’ll show you what to expect from each route and point out the risks to watch out for along the way.

We’re big believers in the value of impartial advice. In our experience, it goes a long way to helping customers enjoy the best possible retirement outcomes.You can turn your pension savings into a regular income that’ll keep going for as long as you do.

How does it work?
You can turn your pension savings into a regular income that’ll keep going as long as you do. This option is also referred to as ‘buying an annuity’. You give some or all of your pension savings to an insurance company – and, in return, they’ll pay you a guaranteed, regular income
every year for the rest of your life. How much income you can expect to receive will depend on the money you’ve saved, your age and health when you retire and any extra features you choose to add.

What are my options?
With a secure income, you can ‘bolt on’ extra features that will offer some extra protection to you and your loved ones after you retire.It’s likely any extra features you choose to add will reduce the level of your pension income.

Take care of your loved ones
You can pass on a portion of your pension income to your spouse, civil partner or other dependant(s) should they live longer than you do.

Keep pace with inflation
You can add yearly increases to your pension income. This can help you protect the buying power of your money as the cost of goods and services inevitably go up in price.

Add a minimum guarantee term
By adding a ‘guarantee period’, your income payments will continue for a set period of time. If you die before the guarantee period ends, your income will continue to be paid to your dependants until the end of the guarantee period.

Be honest about your health
You could get a higher regular income if you have any health issues or habits that could shorten your life expectancy. This is called an ‘enhanced annuity’. So if you’re talking to a provider about buying a secure income, be open and honest about your health. You should also shop around to find the best deal.

What else can I do?
Once you know exactly what features you’d like to add (if any), you can take some confident steps towards taking an income.

Take some tax-free cash
You can usually take up to 25% of your pension savings as a tax-free lump sum.1 Any cash you take will leave you with less money to buy your secure income

Decide how often you want your money
When you’re buying a secure income, you can tell your provider how often you’d like it to be paid. This could be anything from once a month to once a year.

What happens when I die?
Unless you’ve chosen to pass on some of your income to your loved ones or set a ‘guarantee period’, your retirement payments will stop when you die.

What else do I need to think about?
As with all retirement options, there are some potential hazards you’ll need to watch out for if you’re thinking of buying a secure income in particular, here are some other things to think about:

You can’t change your mind
Once you’ve bought a secure income, you can’t usually change your mind – even if your circumstances do.

Adding extra features will lower your income
If you want to add any extra features, such as making sure your loved ones will get some of your income when you die, you should expect
to be paid a smaller income.

 

Weighing up this option

  • No matter what happens, you’ll enjoy a regular income for the rest of your life.
  • You can pass on some of your income to your loved ones when you die.
  • You can arrange for your income payments to increase each year.
  • You can usually take up to 25% of your total pension savings as a tax-free lump sum.
  • You can’t usually change your mind.
  • Taking a tax-free lump sum will leave you less money to buy a secure income.
  • Adding any extra features, such as yearly increases or taking care of your loved ones, will reduce your level of income.

You may be able to take more than 25% if you’ve previously applied to HM Revenue & Customs
(HMRC) to secure a greater allowance