By Peter Barton

So, you’ve worked hard all of your life and now you’re looking forward to more free time, but first you’ve got to interpret the various choices you may have with your pension.

Until recently it was quite straightforward for most people – they took their 25% tax free cash and bought a lifetime annuity with the rest of their fund. But even then they had to choose which options to include: level, escalating, spouse’s pension, length of guarantee… I could go on.

In April 2015 “pension freedoms” were introduced and the choice became more complex. With flexi-access drawdown you can take as much or as little from your fund as you wish, with the first 25% of each withdrawal being tax free and the remainder taxed at your marginal rate.

Usually there are no guarantees, so the risk is with the policyholder, but it does allow much greater flexibility, albeit you could run out of money if you withdraw too much too soon or if your investment performs poorly.

Alternatively, an uncrystallised fund pension lump sum is simply a lump sum withdrawal, again with 25% being tax free. With some older schemes, which don’t offer drawdown, this may be the only alternative to purchasing an annuity.

Annuities are still the right choice for some, especially if they contain valuable guaranteed rates or you qualify for an enhanced income due to health and lifestyle reasons.

Guarantee periods, where the income continues for a set term even if the policyholder dies beforehand, can now last much longer (previously the maximum was 10 years). With-profits, investment or fixed-term annuities are also available.

Pensions may be subject to future legislative and tax changes and your pension provider might not offer every option so please check first.

This article is for information only and too short to explain each option in depth so I would certainly recommend that you seek financial advice – after all, your decisions now could affect the rest of your retirement.

• Peter Barton is an Independent Financial Adviser. Tel: 01603 879875 or 07787 561087 or email