For those who have built up pension funds through their working life, there are different options available when the time comes to access those pension pots. It depends on the ‘type’ of pension scheme and often ‘when’ these pensions schemes were set up, as this defines the rules the scheme had to follow, what benefits it was able to offer to the pensions scheme member, and how they can be taken in retirement.

For example, many of us will have accumulated pensions from working with several different employers, where the employer has contributed money and you the employee has also contributed. These are called Money Purchase schemes. Up to 25% of your pension fund, sometimes more in older type schemes, can be taken as tax free cash – the rest is taken as income and added to other income you have in retirement and is taxed in the normal way. However, you can take this tax-free cash and income in a number of different ways that best suits you:

ANNUITIES – take your tax-free cash, all of it at once. With the remaining 75% you can use all of it to buy an annuity, which will provide you a ‘guaranteed’ income until you die .

PHASED ANNUITIES – take smaller amounts of tax-free cash or all of it at once, and buy a number of annuities spread out over a number of years in retirement.

INCOME DRAWDOWN – you can take all you tax free cash at once you can leave the remaining fund invested and withdraw the remaining 75% as and when you need it.

PHASED DRAWDOWN – you can make withdrawals from your pension fund as and when you need it  – with each withdrawal 25% will be tax free and the remaining 75% will be taxed as income

UPFLS – you can take all the pension fund in one go – 25% will be tax free and the remaining 75% will be income and taxed accordingly.

DO NOTHING – if you have income from other sources you can leave the pension invested if you do not need the income or tax free cash, and pass it on to the next generation.

How to take your pension is a complex matter and it is important that advice is sought. You are able to obtain free and impartial pension guidance from Money Helper's Pension Wise service - https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise or call 0800 011397.

Alternatively, if you want to discuss your options in more detail please get in touch.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.