Pension Options

There are many different pension options to choose from:

• Occupational Pension

• Personal Pension

• SIPP (Self Invested Personal Pension)

• Income Drawdown

• Annuity

By and large an occupational scheme will be best for you. Consider carefully before leaving such a scheme or indeed if you are being advised not to join one.

A personal pension comes in two basic forms: stakeholder plan which is the cheapest version but is restricted in terms of fund choice and a personal pension which has greater fund choice but can be more expensive.

A SIPP allows you to invest into a wide range of assets as detailed below. This openness generally costs more than the above two options.

Income Drawdown allows you take an income from your fund at retirement without actually encashing your pension scheme. This allows your capital to continue to be invested for growth allowing you the chance for further growth on your fund and the possibility that interest rates may go your way as well as the obvious fact that annuity rates will increase, as you get older.

It doesn’t necessarily always go your way and both rates and your fund may fall – not pretty reading when you come to retire. Take good advice before proceeding on any income drawdown.

An annuity is simply an income from an insurance company. Don’t be distracted by the many options facing you in terms of with profit annuities. Their benefit is generally limited to the organisation selling them and they have little benefit.

Read the section on ‘Which Pension Option is Best for me?’


‘Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made’

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