E. Create a flexible income

This option is also known as  'flexi-access drawdown' It’s a method of creating a retirement income that offers an alternative to an annuity. You can keep your money invested while taking an income from it, investing your retirement savings in funds designed to generate an income for you. Unlike the annuity, the income is not guaranteed. What it does offer is the flexibility to make changes to your income levels and/or switch to alternative income options in the future.  and offers an alternative to an annuity. It allows you to transfer all or some of your pension savings into an investment for the sole purpose of providing an income.

It differs from an annuity in two key ways:

  1. The income isn’t guaranteed or payable for life
  2. You choose the level of income you need and when you need it, such as monthly, quarterly, annually or intermittently until the investment runs out

Flexibility and control are the key benefits of this option:

i) You can still take up to a quarter of your money as a tax-free lump sum – in some cases you can do this after transferring all or some of your money to a flexible income investment

ii) You don’t have to take any income straightaway

iii) You can transfer your pension savings into a flexible income investment gradually

 iv) You can choose a selection of investments to match your income goals and level of risk – such as investing in funds or other assets.

 v) You can review and adjust your investments depending on their performance.

 vi) You can use all or some of your flexible income investments to buy an annuity or other guaranteed income product at a later date.

vii) If you decide to use only part of your money to provide a flexible income, you don’t have to leave the rest where it is. 

For example, you can choose one of the other pension options, in effect creating a mix-and-match approach.

Overall, this option provides both flexibility and control: to be adaptable to potential changes in the future and to select, review and manage the investment products.


  • Flexibility and control does mean that careful planning will be essential, not least to make sure you set your income at the right level to make your investments last

  • Get guidance or financial advice to find out whether this option is right for you and your current financial arrangements

  • Pay attention to the set-up and ongoing investment charges. They could potentially erode any positive growth

  • Not all flexible income investments are the same so do shop around.