At retirement - Your pension options

Your options at age 55 (50 until 2010) and 75

• Tax-free cash

  At retirement you can normally take up to 25% of your fund as a tax-free cash sum (also known as pension commencement lump sum) with the remainder being used to provide a taxable income.

• Annuity (secured pension)

  This is where 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.

  Find out more about annuities and the options available

• 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 you are still exposed to the risk of your investments going down in value, or depleting your fund by drawing too much income.

  Income drawdown is not available with all stakeholder pensions and therefore you may have to transfer to an alternative pension.

  Find out more about income drawdown

Your options after age 75

• Alternatively secured pension (ASP)

  If you have not taken an annuity by age 75 your fund will convert into 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.

  Although current legislation is clear that ASP is available to everyone, the government has indicated that it may try to limit it to certain types of religious groups. We allow ASP in our SIPP because it is currently permitted but, as with all legislation, it may change in the future.

  ASP is not available with all stakeholder pensions and therefore you may have to transfer to an alternative pension.

It is crucial you choose the right retirement option. If you are unsure how to proceed at retirement, you should take advice.