F. Mix and match

A mix and match solution covers all the bases in terms of cash lumps sums, lifetime income and continued growth of the pension savings. Clearly the size of the pension savings and how this is organised will determine the impact of charges and tax.

Not all providers can match the flexibility of a mix and match approach so there’s some legwork to be done. As with all options, shopping around is essential as are regular reviews, not least because of the impact of charges over time.

There are some anomalies when it comes to tax-free lump sums. For example, transferring your entire pension savings into a  '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.  scheme without taking a cash lump sum, doesn’t mean that the tax-free lump sum is available at a later date. This isn’t the case for partial transfers to this scheme.


Need to know

  • 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.