Upon retirement, there are several choices to make regarding your income. Most people will choose receive their income from an annuity. It is a regular amount supplied by the annuity company, and once the product is purchased, you have no further involvement with it.

 Income Drawdown however, is quite different, and is recommended to those who are looking to have more control over their income in later life.


With income drawdown, you are free to withdraw money from your fund as and when you like (subject to the conditions of your provider) while the rest remains invested with your pension company. There is considerable flexibility here, because you can convert to an annuity at any time.

There is of course more risk with income drawdown, as your fund is invested and therefore subject to fluctuations. With an annuity, you are guaranteed income for life, and there is no risk. It is for this reason that many financial advisors suggest that those who have a lower pension fund should choose an annuity, to be sure that they will always have a suitable income.


Many people who have income drawdown will actually withdraw money from their pension fund, and invest it in a number of other areas, thus spreading their chances of both getting a good return on investment, and beating the rate of inflation. This is great for those who like a lot of control, but is not for those people who would rather not have to worry about money coming in. It’s all about choice.


Income drawdown is particularly good from an inheritance standpoint. Most annuities, unless additional products are bought, are only payable until death. After this, no further funds are released, even to relatives.With income drawdown however, remaining money (subject to taxes) is inherited as with other assets and estate. Again, those with larger portfolios are generally encouraged to use some form of income drawdown in order to benefit from this.

There is of course no reason you can’t benefit from both a standard annuity and income drawdown. Many people choose to have an annuity that covers the essentials, and the rest is invested in income drawdown. This means they have an excellent combination of security, flexibility and control.

In an ideal situation, you would have a constant income to cover all of your needs, and a well-performing investment too. It’s also important to take charges into account; income drawdown usually incurs higher fees which must be offset by other factors to be of good value.

If you’re considering income drawdown, or any other pension product, it is always a good idea to have a chat with an independent financial adviser. They can help you work out exactly what’s best for you, and how to get the most out of your money. Pensions & Wealth Management Services Limited is a firm of independent advisors, who can offer impartial advice in relation to your pension options. Make sure you’re making the right choice by getting advice from an expert.