How to take your pension at retirement?

, Pension DrawdownHow to take your pension at retirement?

Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

When it comes to taking your pension in retirement there are several options available to you; including pension drawdown, buying an annuity or taking a lump sum from your savings. Below are three ways to take your pension in retirement.

Pension drawdown

Pension drawdown can provide you with greater flexibility when it comes to planning for your retirement. If you are at age 55 and over you will be able to access your savings and decide on how the money is spent.

It is also possible to combine a pension drawdown with a 25% tax-free lump sum. This can be taken as one lump sum or as smaller amounts, if you choose smaller amounts then the withdrawals will be tax-free until you hit the 25% threshold.

The difference between pension drawdown and an annuity is is that pension drawdown allows you to take as much of your savings as you need. Many people prefer this option for its flexibility as it gives them more freedom to decide how they spend their savings in retirement.

However, pension drawdown is an investment option and as such the value of these investments and the income they produce can rise as well as fall, so you may get back less than originally invested.

At Pensionlite we can help you understand your attitude to investment risk and our experienced advisers have the market and industry knowledge to be able to help you make the correct decision for your retirement.


Another way to take your pension in retirement is with a lump sum. From age 55 you can drawdown 25% of your savings as tax-free cash, anything taken after that limit will be taxed at your usual rate.

It is important to note that withdrawing large amounts from your savings may push you into a higher tax bracket, so to stay tax-efficient it is certainly worth seeking professional advice to make sure that you’re not paying too much tax. Taking a pension lump sum allows people planning for their retirement the flexibility to be able to spend their savings as they choose.


If you’re not comfortable with the option of a pension drawdown then buying an annuity might set your mind at ease. Simply put, an annuity converts the money in your pension pot into a guaranteed retirement income for life. Depending on your lifestyle and medical history, you could qualify for an enhanced annuity.

There are many different types of annuity including; fixed term, short term and single life. As with all financial decisions that you might be confused about, making sure that you seek the right advice is crucial. All of our advisers are highly qualified and possess expert knowledge of the industry.

Why not make a no-obligation appointment today and let the team at Pensionlite help plan your retirement and financial future.