Annuity (secured pension)

With an annuity, you use your pension fund to buy a taxable income. This is a secure, reliable income paid to you for the rest of your life.

Income drawdown (unsecured pension)

This is where your fund remains invested within a pension, but you take a taxable income from it within limits defined by the government. This gives you flexibility, as you can vary your income to meet your requirements. But as your fund remains invested your investments could still go down in value, or you could deplete your fund by drawing too much income. Income drawdown is not available with stakeholder pensions and therefore you may have to transfer to an alternative pension.

Your options after age 75

Alternatively secured pension (ASP)

If you have not taken an annuity by age 75, your fund will convert into an ASP. This is similar to income drawdown, although if you have not taken any tax-free cash from your plan you will not be able to do so, and the income you can take is more restricted to reduce the risk of running down your retirement fund early. An ASP is not available with stakeholder pensions and therefore you may have to transfer to an alternative pension.

We view pensions as an investment vehicle with unique features and tax treatment.  By taking this approach, we align our retirement solutions with our client’s personal circumstances and objectives, ensuring their retirement planning fits cohesively into any financial strategy. If you would like to discuss your retirement objectives, please contact us.

Call our IFA today on 0845 20 20 360