Pensions guides

When you reach retirement, you can normally take up to 25% of your accumulated pension fund as a tax-free lump sum.

The remainder of the fund can be used to provide an income - to do this you have to buy an annuity. Alternatively, you can use the entire fund to buy a larger annuity.

How an annuity works

An annuity uses the funds from your pension to buy a plan that will provide an income, and potentially other benefits, for the rest of your life.

Once you buy an annuity, you can't usually amend it - so it pays to make the right decision. And, once you use all your retirement benefits, your pension plan ends - you can't make any more pension payments.

The amount of annuity you can buy will depend on a number of factors including:

• annuity rates
• your age, sex and state of health
• life expectancy rates
• whether or not the annuity is guaranteed to be paid for a minimum period

Note

• You can buy your annuity from us or another pension provider or registered pension scheme

• Your annuity income will be taxed under the usual Pay as You Earn (PAYE) system.