When you approach retirement, you have an important decision as to how 
to switch on income from the pension funds you have accumulated during 
your working life.

Some people will have final salary schemes that were arranged through 
an employer. These pay a pension income that is dependent upon your 
length of service and final salary.

Most people, however will have accumulated pension funds through a 
money purchase arrangement. This is where the amount of pension you 
receive is dependent upon the size of your pension fund and other 
factors such as your age, gender and benefits that you choose to build 
in to your retirement income.

Historically, low interest rates and increased life expectancy has 
significantly reduced the income you can expect to receive from your 
pension when compared to a decade ago. It is therefore important that 
the decision you make is the right one.

At retirement you do not have to purchase your income from the same 
company or companies with whom you have built up your pension funds. 
You have the right to an Open Market Option, which is the ability to 
transfer your pension funds to the provider offering you the highest 
income or most appropriate contract to meet your retirement needs.

You then need to consider how you want to draw your income. There are 
a number of options available, which include:

•Conventional annuity
•With profit annuity
•Investment annuity
•Income Drawdown (now known as Unsecured Pension)
•Phased Retirement

The most appropriate option will depend on a number of factors 
including whether your retirement needs are fixed or flexible, your 
attitude towards investment risk, the structure of your other income 
and assets and the size of your pension funds. For those with larger 
funds, a combination of the options available may be suitable.

The main retirement options are: 

•Conventional annuities
•With profit annuities
•Investment linked annuities
•Income drawdown
•Phased retirement
•Temporary annuities