Want the flexibility to change your income whenever you want?

Taking a flexible income means that you can leave your money invested in your pension pot. You can take as much or as little money out as and when you need it. You can also set up a regular income to ‘drawdown’ your money if you like, but you don’t need to.

This gives you the freedom to change the amount of income you get in line with that you need to suit you and your lifestyle, and also gives your pension pot the potential to grow. It’s important that you keep an eye on how much you take out of your pension pot and what’s left, as your income will stop if your money runs out. Your investments could also go down in value as well as up.

Want to know more?

From age 55, you can choose to take a flexible income from your pension.

You can dip in and make a cash withdrawal anytime you like. While your money stays invested, giving your pot the potential to keep on growing.

You can also pass your pot on to your loved ones when you die, inheritance tax free.

You can choose to buy an annuity at any time to guarantee an income for life.

What do I need to think about?

There’s always the chance of your investments performing poorly and the value of your pot significantly falling.

Normally, only the first 25% of your withdrawals are tax-free, the rest is taxed as income.

Remember, you must make sure your money lasts as long as you need it to.

Take a look at our Why choose a flexible income? guide to find out more.

What are the pros and cons of taking a flexible income?

Pros

Potential for your pension to grow

As the remaining money in your pension stays invested, it has the opportunity to grow. You could also benefit from future stock market growth free from UK income and capital gains tax.

Flexibility

You can keep your options open and take an income as and when you need it.

Pass on your wealth

You can pass on what’s left in your pot to your loved ones, usually free of inheritance tax when you die.

Investment choice

You’ll be in control and can pick where you invest your money (you can get an adviser to do this for you).

Cons

There's no guarantees

You could run out of money if your investments don’t perform as expected, you withdraw too much or you live longer than you expected. Remember your income stops when your money runs out so you need to consider the longer-term impact of taking withdrawals from your pot as you could run out of money before you die. As your plan continues to be invested the charges will be ongoing.

Your ongoing ability to pay in may be affected

Taking more than your tax-free cash usually reduces the payments you or an employer can make to any of your money purchase pensions from £40,000 a year to £4,000. If you’re still wanting to save more into your pension you should think about what this means for you.

State benefits could be affected

Your entitlement to means-tested state benefits may be affected if you take cash or an income from your pension. You should check this isn’t going to be a problem before going ahead. For more information visit the Money Advice Service website.

Not sure if a flexible income is right for you?

Option Guaranteed for life? Is my money invested and
does it have the potential to grow?
Can I access my money at any time? Can I pass on what’s left? More information
Take a flexible income No Yes Yes Yes
Take cash from your pension No Yes Yes Yes
Buy a guaranteed income (Annuity) Yes No No No*
Leave your pension for now No Yes Yes Yes

*Usually you can’t pass on your guaranteed income for life, but you could add on options – for example, to pay a spouse's pension after you die, to keep paying the income for a guaranteed period, or to include value protection which provides a lump sum death benefit.

Want to get started?

Finger print

Think a flexible income is right for you?

You can set up a flexible income online. Simply log in or register today.

Keep in mind that not all plans offer a flexible income and you many need to transfer your pension pot to a new Standard Life plan.

Log in or register today >

Why not bring your pensions together?

If it’s right for you, combining your pensions into one plan could help by giving you one view. Making your money easier to manage.

Transfer your pension >
Money notes

Get free impartial guidance

Go to pensionwise.gov.uk or call 0800 1383944 for free impartial guidance face to face or over the phone. You can also take a look at the Money Advice Service for more guidance.