Here’s a quick guide to the different products you should consider before you make a final decision about your retirement income.  You should always speak to your financial adviser about the right choice for you.

Annuities

One of the most popular ways to secure an income for life is to buy a lifetime annuity.  A lifetime annuity will provide you with an income for the rest of your life.  That means you don’t have to worry about running out of money.  Instead you can concentrate on making the most of your retirement.

Put simply, it’s an exchange. The money saved in your pension fund is traded for an income for life when you retire. 
You have the option to shop around at retirement for the best deal. This is called the ‘open market option’.

It’s generally in your interests to explore all of the options available as it can make a significant difference to your income in retirement
You can find out more about these options here.

Income drawdown
Income drawdown is not an annuity.  It is known as an unsecured pension. Income drawdown is not available from MGM Advantage but this summary aims to help you to understand the options available to you.  You should contact your adviser for more information.

Income drawdown is usually only suitable for people with pension savings of at least £100,000.  This is because it carries greater risk than an annuity.  For example, it doesn’t guarantee that you will receive an income for life and, because your pension savings stay invested, the value of your fund can fall.

However, income drawdown does offer greater flexibility than a conventional annuity. You can access your tax free cash and not take any further income leaving your pension invested. You can take regular income or one-off withdrawals within certain limits. You will need to buy an annuity by age 75. 

These are popular products with people that have significant pension savings. We have also produced a comparison between income drawdown and annuities, which you can view here. 

Alternatively Secured Pension

This is also an unsecured pension and is a continuation after age 75 of income drawdown. In other words, you don't buy an annuity. The amount of income is restricted and may well be less than from a conventional annuity. The taxation of death benefits can be high.

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