Read & Learn

It has always been possible to take 25% of your pension pot as a tax-free lump sum but now everybody can take the remaining 75% of their pension pot as a cash sum as well, but it will be taxed at your marginal rate.

An annuity pays you a guaranteed income for life. It is a policy that converts a lump sum (normally your pension pot) into a series of regular income payments for the rest of your life no matter how long you live.

Annuities are provided by insurance companies who invest your money in secure assets and will pay you a regular income every month (other frequencies are available) for the rest of your life. If you select a joint annuity, and you die before your spouse or partner, the income will continue for the rest of their life

A drawdown plan lets you have the normal 25% tax free cash sum and then you can take regular or ad hoc income payments directly from your pension pot.

• Income flexibility – you can take as much or little income as you need
• Control of investments – you can decide where your pension is invested
• Choice of death benefits – you can decide what happens to your pension pot after your death.