State Pension Deferral
Small Pots
Flex Access Drawdown


Pros Cons

  • Can withdraw more than just the 25% tax-free lump sum – all of the fund if you wanted
  • Complete flexibility in how much you draw out of your pension
  • Attractive death benefits – before the age of 75 the full amount will be tax free


  • Any amount taken out over the 25% tax free lump sum will be taxed at your marginal rate of income tax
  • You run the risk of running out of money while in old age
  • The income you receive from your pension will not be secure
    if it is invested compared to an annuity
  • Could potentially pay tax at 40% or 45% if you take out a large lump sum
  • If you take any money from the un


Pros Cons

  • Guaranteed income for life
  • No investment risk
  • Flexible options including spouse pension, guaranteed periods and rising income
  • Potential for an enhanced annuity depending on health where this would pay a higher income due to the decrease in life expectancy



  • May not get back what you paid
  • Potential inflationary risk
  • Currently locked in for
    life once you have purchased - though this could be changing


Pros Cons

  • Every 9 Weeks you defer your state pension you will receive an additional 1% - this works out as an additional 5.8% per annum
  • Will guarantee you a higher income for life than the standard state pension you would have received
  • Potential to reduce the tax burden from any pensions freedoms if managed correctly


  • The increase in future income could affect potential state benefits
  • You may not receive more in income if you were to die prematurely

Small Pots and Trivial Commutation

Pros Cons

  • Enables you take 3 pension pots each being under the value of £10,000 as a lump sum without affecting your annual allowance
  • Potential to defer the state pension and live off the fund value depending on your circumstances
  • The minimum age for taking a small pension pot as a taxed lump sum will reduce from age 60 to age 55



  • Tax will be paid on 75% of the pot values at your marginal rate of tax
  • Potential to run out of money


Pros Cons

  • Potential to reduce risk – investment, inflationary and premature death
  • Potential to benefit from a more flexible approach to retirement with guaranteed minimum incomes
  • You wont be tied into one way of producing your retirement income



  • May not be suitable for everyone depending on his or her pot size.
  • Still has an element of risk