Step 2 – Your pension options

This step introduces the main pension options once you reach 55 years old. You may already have a good idea which option suits you but it's really worth comparing the features and benefits of each option for added peace of mind.

Once you’ve understood and compared the options, move onto Step 3 – Retirement calculators.

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4 pension options

A guaranteed income for life – an annuity

You could be paid a set amount every month for the rest of your life, so you’ll know exactly how much you’re getting and when.

  • Combine the value of your pension pots
  • Take up to 25% tax-free
  • Use the rest for a guaranteed income

See annuity options

Flexible access – Flexible Drawdown/Partial Pension encashment (PPE)

You can take out what you like when you like. The rest is left invested so it has the potential to grow. If you do cash in your pension pot, any future contributions that receive tax relief will be limited to Money Purchase Annual Allowance (MPAA) – currently £10,000 p.a. If MPAA applies, you will need to notify the providers of any other money purchase pension plans you have within 91 days of receiving the cash payment.

  • Take some money tax-free
  • Leave the rest invested
  • Take bits when you need it

See flexible access options

Take it all in cash

You can now take all of your pension pot out in cash, however much it is. If you do cash in your pension pot, any future contributions that receive tax relief will be limited to Money Purchase Annual Allowance (MPAA) – currently £10,000 p.a. If, MPAA applies, you will need to notify the providers of any other money purchase pension plans you have within 91 days of receiving the cash payment.

  • Combine the value of your pension pots
  • Take up to 25% tax-free
  • Get the rest subject to tax

See take cash options

Leave it for now

Keep your money where it is in your pension pot. It’ll give you the time to think about your pension options and you can plan how best to use it to provide for your future. Your pot is left invested so it has the potential to grow.

  • Do nothing now
  • See how your money could grow
  • Decide what to do later

See leave it invested

If you decide to leave your pension pot you could lose any guarantees that might only apply at your selected retirement age.

Compare your pension options side by side

Comparison table

Comparison table

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.