Other Retirement Options
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If you don’t want any of the types of annuity mentioned earlier, or if you decide to delay buying a lifetime annuity, then you may want to consider a few other options.
Some are only suitable if you have a large pension fund or other sources of income, and you are comfortable taking some risk with your fund. For advice based on your own circumstances, talk to a professional adviser.
After taking a tax-free lump sum, you may have the following options:
Investment-linked lifetime annuity
This relies on stockmarket performance and therefore your income could go down as well as up.
Phased retirement
You can split your pension fund up and buy annuities at different times.
Unsecured pension using income withdrawal or short-term annuities.
This lets you draw an income from your pension fund while leaving it invested, but will stop when you reach 75. By that time you must secure an income, which usually means buying an annuity.
Hybrid products
These new products pay a regular income and offer guarantees of either investment growth or the amount of pension fund you will have left to buy an annuity later on.
They vary in what they’re called, the guarantees they offer, and the charges they make to cover the cost of the guarantees. You generally have to give up some investment growth potential to pay for the guarantees.
Alternative Pensions
At age 75, if you haven’t bought an annuity, another option is to use an alternatively secured pension. This works in a similar way to an unsecured pension but has different rules and income limits.
However, the government has indicated that they are only intended for a small group of people who have a religious objection to buying an annuity. Inheritance tax and other significant tax charges may apply to any leftover funds on your death.