Take your tax-free cash and leave your pension invested with Pension Drawdown
Drawdown is a higher risk option than buying an annuity and only suitable if you have alternative sources of income or other pensions. It allows you to take the tax free cash and leave the remainder of your pension fund invested with the option to take an income if required of up to 120% of an annuity (standard single life, level with no guarantee basis) until a retirement age of 75.
Instead of buying an annuity with the remainder of the fund, the money remains invested, where it may benefit from investment performance in a tax-efficient environment. You may in this way defer taking an annuity until such time it is considered more appropriate. Before April 2006, an annuity had to be bought by age 75. This is no longer necessary, although the member must move into ‘Alternatively Secured Income’, a more restrictive form of Unsecured Income.
The word ‘unsecured’ is used to differentiate between Annuity purchase – where the pension income is ‘secured’, fixed for life, and carries guarantees to this effect. As ‘unsecured’ funds remain invested, there are no guarantees that any level of income can be maintained indefinitely.
To find out more vist the pension drawdown calculator. here