The Income Choice in Retirement

A grgoup of women laughing out loud

How do you intend to convert your pension pot into income when you retire? 

To some extent the answer depends upon how you intend to retire, which is increasingly a more gradual process. 

Flexibility is normally more important for a phased retirement, as you will need to adjust your pension benefits according to the level of your earnings, as well as the arrival of the state pension.  

How you draw your pension income will also depend upon:

  • the other income that you expect to receive in retirement;
  • your attitude to risk; and
  • the extent to which you want to use your pension as part of your estate planning. 


At one end of the pension income spectrum is the annuity, which guarantees an income for life.  Volatile investment markets have rekindled the appeal of fixed payments, while rising long-term interest rates have significantly improved annuity rates. At the other end is income withdrawal, which offers maximum flexibility and better estate planning benefits, but with investment risk replacing the annuity’s guarantee. 

Falling between annuities and income withdrawals are a variety of other ways of drawing income. Combining different income methods can be a sensible option. For instance, you could use an annuity and add a flexible top up via income withdrawals. 

To understand your options, the first step is to seek advice, well before you need the income to begin. 


State pension age warning

The timing of the move to a state pension age of 68 remains unclear. At the end of March 2023, the government once again deferred the decision, this time until “a further review within two years of the next Parliament”. 


Review Your Financial Plan

To arrange an appointment, you can contact us via your usual MHA adviser, or directly on 01604 621 421 or


Important Information/Risk Warnings

The value of your investment can go down as well as up and you may not get back the full amount you invested. 

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Occupational pension schemes are regulated by The Pensions Regulator.

The Financial Conduct Authority does not regulate will writing and some forms of estate planning.

This is a marketing communication, for general information only, and is not intended to be individual investment advice, a recommendation, tax, or legal advice. The views expressed in this article are those of MHA Caves Wealth or its staff and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. In particular, the information provided will not address your personal circumstances, objectives, and attitude towards risk. Therefore, you are recommended to seek professional regulated advice before taking any action. 

Key Risks: Capital at risk. Past performance is not a guide to future performance. The value of an investment and the income generated from it can go down as well as up, and is not guaranteed, therefore you may not get back the amount originally invested.

Investment markets and conditions can change rapidly. Investments should always be considered long term. 

This Information represents our understanding of current law and HM Revenue & Customs practice as at June 2023. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. 

Tax and Estate Planning Services (including Trusts) are not regulated by the Financial Conduct Authority.