After taking a lump sum, there are various ways to take an income from your money purchase pension. This section takes you through the different options.

Some, such as an unsecured pension or phased retirement, may only be suitable if you have a large pension fund or other substantial assets and you are prepared to take some risks with your pension fund to get greater flexibility and a higher return.

Your options include:

If the total of all your pension funds is less than a minimum amount, you can take some or all of your pensions as a cash lump sum, rather than taking an income. This is known as trivial commutation.

You must be between at least 60 but not yet reached 75 and all the pension funds which you want to ‘commute’ must be converted to cash within a 12-month period.

A quarter of the money you will get is tax free and the rest will be taxed as income.

You don’t have to ‘commute’ all your pension funds, but bear in mind that it might be difficult to get a retirement income from small funds because many annuity providers will not take funds below a specified minimum, say £10,000.

If you are using more than one pension fund to buy an annuity, think about combining them when you are shopping around. You may get a better annuity rate from a larger fund. If you have small funds, combining them may also enable you to achieve total funds above the minimum specified by providers.