There are a number of ways you can use your defined contribution pension pot.
Retire later or delay taking your pension pot
You don’t have to start taking money from your pension pot when you reach the age your pension provider has recorded for you to retire. You can leave your money invested in your pot until you need it.
Find out more in our guide Retire later or delay taking your pension pot
Guaranteed retirement income (annuities)
You can choose to take up to 25% of your pension pot tax-free. You can then use the rest of your pot to buy an annuity that guarantees you an income for the rest of your life – no matter how long you live. You can also get a guaranteed income for a fixed period.
Find out more in our guide Guaranteed retirement income (annuities) explained
Flexible retirement income (pension drawdown)
You can take up to 25% of your pension pot tax-free, and keep the rest of your pot invested to give you an income. You decide how much to take out and when. You can set up a regular income if you choose. How long it lasts will depend on how your investments perform and how much you take out.
Find out more in our guide What is flexible retirement income?
Take your pension as a number of lump sums
You can take smaller sums of money from your pension pot until you run out. Your 25% tax-free amount isn’t paid in one lump sum – you get it over time. 25% of each lump sum is tax-free, and the rest is taxed as earnings.
Find out more in our guide Taking your pension as a number of lump sums
Take your whole pension in one go
You can cash in your entire pot – 25% is tax-free, and the rest is taxable.
Find out more in our guide Take your whole pension in one go
Mix your options
You don’t have to choose just one of these options, you can choose to mix different options. This can give you flexibility to suit different needs at different times during your retirement.
For example, you could use one option at the beginning of your retirement – such as flexible retirement income. And you can use another option later – such as an annuity to get a guaranteed retirement income.
If you have a large pot, you might be able to split it to provide some guaranteed retirement income and leave some invested.
If you have more than one pension pot, you could choose different options for each pot.
You can also keep saving into a pension if you want, and get tax relief up to age 75.
Some providers offer products that mix two or more options.