Income options in retirement from Horbury Financial Services Limited

Income options in retirement

Income options in retirement

You have more options than ever when it comes to taking your retirement benefits. Legislation changed in April 2006 which means that you don’t now have to stop working in order to access your pension benefits, so you could for example continue to work part-time whilst supplementing your income from your pension.

Tax-free cash.

When you decide to take you benefits you can normally take up to 25% of your fund as tax-free cash. You can access benefits from age 55.


Many people still prefer to buy an annuity with the remainder of their funds from a money purchase scheme, to give them a guaranteed income for life. However, you don’t have to stick with the annuity offered by the pension provider. You can shop around for your annuity, known as the “Open Market Option”, which could get you an enhanced rate, especially if you have applicable health or lifestyle considerations.

It’s essential to get advice in the annuities arena because there are a number of options you can choose, for example a level or escalating amount of income, a guaranteed period or a spouse’s benefit.

Horbury Financial Services Limited can help guide you towards the best options for you and your dependants.

Income Drawdown.

Capped Drawdown

However, you don’t have to purchase an annuity straight away. If your fund is large enough, and you are happy to stay invested, you can draw an income directly from the fund within certain prescribed limits. Again, this is a specialised area and much depends on your individual circumstances and attitude to risk.

Flexi Access Drawdown

This came into effect this year and offers more pension freedom to consumers. It operates in the same way as Capped Drawdown does however, there will be no limit on the income taken.  After you have taken your entitlement to the tax free lump sum at outset (usually 25% of the policy value), you can choose to take as much or as little of the remaining pot as you wish and it will be added to any other income you have in that tax year to determine the income tax rate that will apply. 

We feel that it is important to seek guidance or advice on any type of drawdown as it can affect your tax position and your potential for income in retirement.

For advice in all these areas, contact us for an appointment by filling in the form on the right or calling us FREE on 0800 069 9029 or on 01977 617975.