Once you have reached your retirement age, you have a decision to make on which type of pension income you wish to receive. Below are the main income options available.
• Scheme Pension – if you are a member of your employer’s occupational pension, they will pay you a taxable scheme pension direct from their occupational pension scheme.
• Lifetime Annuities – pay you a taxable income for the rest of your life and are purchased from insurance companies with your accumulated pensions funds. There are a myriad of annuity options and the merits of each one should be considered before making your final choice, as they cannot be changed at a later date.
• Drawdown – allows you to take a taxable income direct from your pension funds and is an option with most personal pensions. HM Revenue & Customs (HMRC) sets a limit on the maximum amount of income you can take from the fund. You must review your arrangement every three years to make sure it is within this limit. There is no minimum amount of income that must be taken.