You decide how much income to take and when to take it. This means you can increase withdrawals if you need more cash for a big expense, or reduce them if you want to preserve your pot for the future. Unlike an annuity, you’re not locked into a set figure for life.

With drawdown, your pension savings don’t just sit still — they remain invested, giving them the potential to grow even after you’ve started taking an income. This could help your money last longer, although of course the value of your fund can go down as well as up.

As with other pension income options, usually up to 25% of your pension pot can be taken tax-free. You can take this as one lump sum at the start, or spread it across several withdrawals over time. Having that choice means you can manage both your tax bill and your cash flow more effectively.

Any money left in your pension pot when you die can normally be passed on to your beneficiaries, often in a tax-efficient way. This option is also available with annuities, although it isn’t the default arrangement.

Choose your own investments, such as funds or shares, if you’re confident and comfortable with investing.

Many drawdown providers offer ready-made investment strategies designed around common retirement goals. These can be a simpler option if you don’t want to make lots of decisions yourself.

An adviser can set up and regularly review your investments, for an annual fee, making changes to suit your needs and the market.

This option provides a guaranteed income for life, no matter how long you live, or for a fixed term. It removes the worry of running out of money and makes budgeting easier, since you’ll know exactly how much you’ll receive each month. You may even secure a higher income for life with an enhanced annuity if you have certain health or lifestyle conditions.

Instead of moving into drawdown, you can withdraw lump sums straight from your pension pot, often called an Uncrystallised Funds Pension Lump Sum (UFPLS). Each payment is usually 25% tax-free, with the rest taxed as income. This can work well if you want occasional access to larger amounts, but you’ll need to manage the tax and ensure your pot doesn’t run out sooner than expected.

Some people choose to cash in their pension completely. While this gives you full control of your money, it could lead to a big tax bill and means you’ll no longer have a pension to provide income in the future. Careful planning is vital if you’re considering this route.

You may prefer a mix of options to balance flexibility with security. For example, you could use part of your pot to buy an annuity that covers your essential bills, while keeping the rest in drawdown to provide additional income and potential investment growth. This way, you get the reassurance of guaranteed income with the freedom to adapt as your needs change.