Once you turn 55, you’ll need to think about:

• When you want to take your retirement savings
• How you want to take your retirement savings

When's the right time?

You can start taking your TPT savings any time once you’ve reached age 55. Remember though, unless you have other savings or income, this money will need to last for the rest of your life.

How to take your savings

You can choose how to use your retirement savings from one, or a combination of, the following options:

• Buy a guaranteed income (‘annuity’)
• Draw a flexible income – the ‘drawdown’ option
• Take your savings as one lump sum, or a little at a time to suit you

Regardless of which option (or options) you choose, you are able to take 25% (or a quarter) of the total value of your savings as a tax-free lump sum.

Buying a guaranteed income (also known as an annuity)

This means that you use all or part of your savings pot to buy a guaranteed, regular income – either for the rest of your life, or just for a fixed period.

This is what you may have heard referred to as an ‘annuity’, and it’s the traditional way of accessing your savings.

Before choosing an annuity, you can still take up to 25% of the pension fund as a tax-free lump sum if you wish.

Three top tips:

1. You can buy an annuity that stays the same or one that increases each year in line with inflation. If you choose the increasing option, the income you are paid will be lower to start with to take future increases into account.
2. You can also choose for an income to be paid to your partner or dependants in the event of your death. Your annuity income would be lower to reflect this.
3. Once you’ve bought an annuity you can’t change your mind, so make sure it’s the right choice for you. Take the time to shop around to find the best deal - a regulated financial adviser could help you.

Tax

You can take up to 25% of your pension savings tax free. The regular payments you receive (you can choose monthly or annually) will then be taxed like income. So, if you’re still working when you buy your annuity, to work out your tax liability you’ll need to add the total yearly payment from your pension to your annual salary – keep an eye on it, as it could tip you over into a higher tax band.

Further information & help

Pension Wise is a free impartial guidance service offered by the Government. Click here to find out more and the types of support they can offer you.

Alternatively, when it comes to making big decisions or understanding your options, it can help to talk about your pension and your options as you approach retirement with a financial adviser.

You can find out more about sources of guidance and advice here.

Other retirement options are available, you can click here to find out more. When you're reviewing your retirement options, you’ll need to read our Risk & Warnings page.