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Income in Retirement

The pensions reform introduced in 2015 has brought much greater flexibility for individuals income in retirement, but at a greater risk. Seeking Financial Advice is now more important than ever.

The three main options are :-

Uncrystallised funds Pension Lump Sum (UFPLS)

A new way of taking money out of your pension. A lump sum can be taken from uncrystallised pension savings with this option. Uncrystallised means that this portion of your pension has not had any tax free cash taken and/or it is not providing you an income. With this option there is a 25% tax free element and the balance is taxed at the members marginal rate of tax.

Flexible Access Drawdown

This new form of income withdrawal allows you to take pension income (taxable) with no upper limit. You can take 25% tax free cash (also referred to as pension commencement lump sum) with the remainder paid as income over a period of time or in one payment. This option is available to all individuals of minimum pension age (currently 55).

Lifetime Annuities

The individual hands over a lump sum (their pension pot after taking the tax free cash) in exchange for a guaranteed payout for life, regardless of how long (or short) you live. Additional benefits can be selected at outset such as; a joint life annuity (which will enable an income to  continue until both parties have died) and payments increasing each year by a set amount (including the Retail Price Index). You can also link the annuity to the investment returns, in which case your income can go down due to poor performance.

Moreover it is possible that you can “mix and match” all of these retirement income options, and for a large number of clients this will be the most appropriate course of action. If this sounds complicated, then you would be right. Which is why taking Financial Advice for many will be the right course of action.


The value of investments and any income from them can fall as well as rise. You may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

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