What will you be able to do with your money? These are your main options. But remember, if you have a salary-related pension (defined benefits / final salary) scheme these are not automatically accessible to you in the same way.
Flexible retirement income (pension drawdown)
You can leave your money in your pension pot and take an income from it.
Taking lump sums (UFPLS)
You can leave your money in your pension pot and take lump sums from it as and when you need.
Guaranteed income for life (annuity)
You can move your pension to an insurance company who will provide you with a lifelong, regular income. This income will be taxed as earnings.
If you have a pension worth less than £10,000 you can take it as a small pot lump sum.
If your pension pot exceeds £1.055 million you may have to pay a tax charge.
Choose more than one option or mix them
You can also choose to take your pension using a combination of some or all of these options over time or over your total pot. If you have more than one pot, you can use the different options for each pot. Some pension providers can offer you an option that combines a guaranteed income for life with a flexible income.
Some useful tools
The value of investments can go down as well as up, so you may get back less than you invest. Tax treatment and eligibility to invest in a pension depend on personal circumstances. All tax rules may change in future.
This information is not a personal recommendation for any particular product, service or course of action. Pension and retirement planning can be complex, so if you are unsure about the suitability of a pension investment, retirement service or any action you need to take, please refer to an authorised financial adviser.
Pension money cannot normally be withdrawn until age 55.
Our retirement service team can explain what retirement income options are available within your existing pension plan and which are not. They can also refer you to our team of retirement specialists who can provide information on alternative options like retirement advice. Call us on 0800 3 68 68 73, Monday to Friday, 9am to 5pm.
It is important that you shop around to find the best deal for you, as you would with any other purchase. Your pension provider may not offer the option you want or other providers may be able to offer you a better deal, so it is worth comparing what each provider can offer. The Pension Wise website provides more information on shopping around: https://www.pensionwise.gov.uk/shop-around.