Mix and match your retirement options

Combine options to meet your needs

If you’ve got a defined contribution pension, you’ll also have the choice of blending your retirement options to fit your needs and the lifestyle you want. 

Whether you’re more of a homebody that’s looking forward to a spot of gardening or you plan to spend your retirement trekking the Andes, being able to choose different ways to access your pension will give you an added layer of flexibility when you take your benefits. You can access your pension from the minimum pension age this is currently 55 and is changing to 57 from April 2028.

1. Control over your pension options - you choose the combination of income and cash withdrawals
2. Getting the most out of your pension - find the right balance between guaranteed income and flexible income
3. Tailor your plan - choose a retirement plan that changes as your retirement needs change

Before you make any big decisions, just make sure you’re aware how every option works.

What are your options?

You’ll need a defined contribution pension to combine different retirement options. This is just a common type of pension of which the value will depend on how much has been put in, the performance of your investments and any charges deducted.

If you’re not sure what you have, you can check with your employer or provider.

Whichever option you choose you can usually take up to 25% of your pension money tax-free. The remaining money can be taken as income or as a cash lump sum and will be liable to income tax.

How does it work?

Your retirement lifestyle is completely up to you, we’re just here to show you all of your options, so that you can enjoy a retirement that’s totally yours. Here are a few ways it could work.

• You could choose to buy a guaranteed income (called an annuity) with some of your pension money, while leaving some to provide a flexible income or cash lump sums when you need them
• Or, if you plan to ease into retirement, you may choose to take some money flexibly to start with and then later buy an annuity to provide a guaranteed income
• Don't forget, in addition, you can usually take up to 25% of your pension tax free. This can be taken all in one go or over time, depending on the options you choose 

You can read more about the different pension options here. 

What you need to consider

• Your options
  Firstly, you should look into each option thoroughly to check whether it’s right for you. There are lots of different providers you could choose. They’ll also each have varying fees, charges, and ways to manage funds that could be key factors in choosing the right option for you.
• Your circumstances
  A lot depends on the amount in your pension and the lifestyle you want. The amount you need now and in the future might be different. It could be that you don’t need as much as expected because your outgoings decrease, or you could need more to cover unexpected costs when you’re older like medical expenses or long-term care.
• Your pension
  You’ll need to understand the terms and conditions of your pension policy. If you currently have benefits or guarantees, these might disappear or be negatively affected by the options you pick. Transferring to another provider can be a helpful way to combine and manage your pensions, but you also risk losing benefits and you may put your capital at risk when you move – the value of your pension can go down as well as up. There’s also the state pension to consider, which can supplement your personal pension.
• Your investments
  If you decide to keep money invested, its value could decrease as well as increase and there’s always the risk you could get back less than has been paid in. You’ll also keep paying any related fees and charges. So, make sure you’re happy with how your funds are invested because there are different levels of risk. You’ll need to pick one you’re most comfortable with. This will depend on what’s in your pension pot, and how you intend to spend it.
• Your tax allowances
  You’ll need to understand the tax implications, which depend on the options you want to combine and the amount of money you’d like to allocate to each. Tax treatment is based on your personal circumstances and may be subject to change in the future. If you’re unsure about anything, it’s a good idea to get financial advice.