# Pension Drawdown & Annuities

> The main ways to take a defined contribution pension from age 55 — drawdown, an annuity, or lump sums — how each is taxed, and the free Pension Wise guidance.

Canonical page: [/investing-pensions/pension-drawdown-and-annuities](/investing-pensions/pension-drawdown-and-annuities/) · Last reviewed: 2026-08-22

When you come to take a defined contribution pension, you usually have to decide how to turn your pot into retirement income. The main options are drawdown, an annuity, or taking lump sums — and you can combine them.

## Key information

- You can normally access a defined contribution pension from age 55 (57 from April 2028)
- Up to 25% is usually tax-free; the rest is taxed as income
- Drawdown keeps the pot invested and lets you take a flexible income
- An annuity buys a guaranteed income for life or a set period

## Tax-free cash and how income is taxed

From age 55 (rising to 57 in April 2028) you can normally start taking a defined contribution pension. Typically the first 25% you take is tax-free, up to an overall limit, and the rest is taxed as income at your normal rate when you draw it. How and when you take the taxable part is the main decision.

## Pension drawdown

With flexi-access drawdown you leave your pot invested and draw an income (and lump sums) from it as you choose. It offers flexibility and the chance of further growth, but [the pot can also fall in value](/investing-pensions/investment-risk), and there is a risk of running out of money if you take too much or investments perform poorly. Once you start taking taxable income flexibly, the amount you can still pay into pensions with tax relief drops to the money purchase annual allowance of £10,000 a year.

## Annuities

An annuity is an insurance product that converts some or all of your pot into a guaranteed income, either for life or for a set period. It removes the risk of running out of money, and you can add features such as protection against inflation or an income for a spouse — though these reduce the starting amount. Rates depend on your age, health and interest rates, so it pays to [shop around](/tools-calculators/financial-directory/pension-providers) rather than simply take your provider’s offer.

## Getting the decision right

This is one of the most important and often irreversible financial decisions you will make, and many people mix the options. Everyone aged 50 or over with a defined contribution pension is entitled to a free Pension Wise appointment for impartial guidance, and regulated financial advice can give a personal recommendation. Be alert to [scams around pension access](/investing-pensions/pension-scams) — anyone offering to help you take your pension before 55 is almost certainly a fraudster.

## Your rights

- Everyone aged 50 or over with a defined contribution pension is entitled to free, impartial guidance from Pension Wise (part of MoneyHelper).
- You can normally take up to 25% of a defined contribution pension tax-free, subject to the overall limit.
- Providers must be FCA-authorised; you can complain and escalate to the Financial Ombudsman Service if a problem is not resolved.

## Official sources

- [Pension Wise (MoneyHelper) — free guidance](https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise)
- [GOV.UK — plan your retirement income](https://www.gov.uk/plan-retirement-income)
- [Check a firm or adviser on the FCA Register](https://register.fca.org.uk)

## Related

- [Personal Pensions](/investing-pensions/personal-pensions/)
- [State Pension](/investing-pensions/state-pension/)
- [Workplace Pensions](/investing-pensions/workplace-pensions/)
- [Investment Risk](/investing-pensions/investment-risk/)
- [Pension Scams](/investing-pensions/pension-scams/)

## Sources

- MoneyHelper — [Options for taking your pension money](https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension) (accessed 2026-08-22)
- GOV.UK — [Plan your retirement income](https://www.gov.uk/plan-retirement-income) (accessed 2026-08-22)