The right choice for me? Annuities and income drawdown

 When you come to open your pension pot, you can either:

  • buy an income – an annuity – from an annuity provider / insurance company
  • keep your fund invested and take a regular income from your pot. This is known as income drawdown.

You can also choose to take all of your pension out as a cash sum and use it elsewhere. However, you will need to pay tax on the excess over the 25% tax free lump sum.

Tax treatment of the pension and the cash lump sum

You do not have to pay tax on the cash lump sum, as long as you do not take more than a quarter (25%) of your benefits or pot as cash. (The proportion may be higher if you have a protected lump sum.)  The amount over 25% will be taxed at your marginal rate. Your marginal rate is calculated based on your income in that tax year with the amount of your pension pot over 25% being treated as income.




What They Say About Us

 if you have a mind-set like I had, bothered about your savings and investments because of past experiences I suggest you speak with Paul of PH7 Wealth Management and let him see what he can do for you.

- John Halstead

Both myself and my partners value the advice and services offered by Paul and have always found his suggestions and explanations to be clear and concise. We’ve appreciated the fact that he makes the time to explain fully all the various options available and you always feel that he his is working in your best interest.

- David Barrett

What I found excellent was Paul’s way of explaining a complicated procedure into layman terms. He made the whole process easy to understand and I felt that he made what was an involved process run smoothly.

- Alan Chaplin

PH7 Wealth Management.

Good financial planning is key to helping you achieve your future goals and aspirations, at PH7 We work with you on your financial journey ensuring you and your families’ long-term future objectives are secure.


Get In Touch

01282 479 930
M-F: 8am-5pm


PH7 Wealth Management Head Office

3rd Floor, Churchill House, 60 Bank Parade, Burnley, Lancashire

BB11 1TS