There are many retirement options available. With this option it allows you to combine cash, guaranteed and flexible income together – you are able to ‘mix and match’ your options to suit your needs. For example:
Pension savings with a value of £50,000 could be split so 25% is taken as cash, £7,500 is used to buy an annuity which will give you a fixed income for life and the remainder is moved over to a flexible income product such as Drawdown. If more than 25% cash is taken this would be taxed at your marginal rate of tax. Payments received from an annuity and a drawdown product would also be subject to income tax at your marginal rate.
You need to consider all of the benefits and risks with this option and further details can be found by using the links below:
Click here to find out more about an annuity
Click here to find out more about flexible options
Remember, you should always shop around to make sure you are getting the right retirement income option for you. You may be able to obtain a higher pension income by shopping around. The easiest way to do this is to contact Pension Wise, speak with a financial adviser, use a comparison website or contact providers directly.
We recommend that you obtain free and impartial guidance from Pension Wise, a pension guidance service which has been set up by the Government, or speak to a financial adviser before you make any decisions about your pension savings.