At retirement age, when your pension pot becomes available, there are a number of options available to you to access the money. The best solution will depend on what you want to do, and your available resources. Traditionally a new pensioner would get access to some tax free cash when their pension becoes available, and would buy an annuity. Oftentimes people take the annuity that comes along with their pension plan. Sometimes they seek a better deal on the open market.

How you take your pension money really will depend on what you need. A big choice, if available to you, is whether you take capital or income. By taking capital you gain access to your money so that you can do with it as you please. This could be appropriate if you have investment opportunities, are still working and have other pension pots, want to pay off a mortgage or debts and become debt free whilst investing the remainder yourself, or any number of other reasons. Income could be more appropriate if you want to have the stability of knowing your regular income over the course of your retirement.

Important to your choice is that you know the death benefits involved in your pension. You need to consider what will happen to your money in the case of your death- whether your family will receive payments etc. This could have a large bearing on the manner in which you take your pension.

For many nowadays retirement age does not necessarily mean retirement from work. More of us are working past 60 and 65, either part time or full time, and this number is only going to increase in the future. Income drawdown is one option to have a phased retirement. Income drawdown allows a pensioner to take an income each year instead of buying an annuity, and to vary the income they take between 0% and 120% of the pension. Other options to smooth into retirement is a short term annuity, or a combination of short term annuity and income drawdown.

As we have seen your decision at retirement involves lots of pension options. It is probably wise to speak to your financial advisor who can help you work out which option will best suit your current and future life situation.