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What Can You Do With Your Pension?

If you think all your tough financial decisions are behind you when you reached retirement, think again. After saving and investing for decades, you’ll want to make sure you make the right choices when it comes to how you take an income when you retire. There are a variety of options, all with their own advantages, so let’s take a look at accessing your money in retirement.

This does not constitute advice and advice should be sought in all instances before acting on it.

There are a few considerations, including levels of risk and security, and of course, tax implications – when and how you decide to take your money will impact how much tax you’ll pay and how long your money might last.

Most pensions come with a set of rules, like when you can start withdrawing without incurring any penalties, and any special circumstances that will allow you to withdraw early. So, when the time does come for you to take your money out, you will need to decide the best course of action.

Here are a few options for taking your pension.


Annuities are basically guaranteed income for life; they enable you to exchange your pension pot for a guaranteed income for life.

In the past, Annuities were the most common pension option, but changes to the pension freedom rules in 2015 enabled savers more flexibility. 

The amount of money you’ll ultimately receive depends on a few different factors, such as your projected life expectancy and any other benefits the annuity might provide. Annuities can just be for a particular period, they don’t always have to be for life, which might come in handy in certain situations.

Pension drawdown

If flexibility is the most important element when it comes to your pension options, then income drawdown, which lets you access your money while it is still being invested (allowing it to continue growing) might be the right option for you.

You can set the income you want to take and can adjust as you go, but with drawdown, income for life isn’t guaranteed, so you’ll need to keep a careful eye on your investments.

With pension drawdown, you can normally draw 25% of your pension fund as a tax-free lump sum, or as a series of smaller sums. This ‘tax-free cash’ is known as the Pension Commencement Lump Sum (PCLS). The remaining money stays invested and is used to provide you with a taxable income, via withdrawals either on a regular basis or whenever you need it.

Combine the two

It is possible to mix and match your options! You could use some of your savings to buy an annuity to cover your basic living expenses and you can place the rest in an income drawdown scheme that provides more flexibility. Whatever works best for you is the right path to choose.

Seek expert advice

As with all retirement decisions, it’s important to take professional financial advice on what’s best for you. Everyone will have unique needs and goals, so if you’d like help deciding what to do with your pension pot or want to find out what options are available for taking an income during retirement, get in touch with us today. 

Have you considered your pension options?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
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Tel: 01403 780 770


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