Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest. 

It’s now more than six years since the options for those reaching retirement were opened up, giving retirees far greater control over how they access their pension savings. 

Prior to April 2015, someone with money saved inside a pension had relatively little choice in how they turned that pot of money into an income for retirement. At that stage, most turned to annuities, the product that pays a guaranteed income in exchange for you handing over your pension savings for good. 

Poor rates of return on annuities, and a sales process that often led to the wrong product being chosen, meant many hitting retirement got a bum deal. 

‘Pension freedoms’ opened up different ways of accessing pension money to far more people. Instead of an annuity, more now had the option to take a ‘drawdown’ income from their pension, or else regular lump sums. These meant that, instead of giving their pot away to buy an annuity, more retirees could keep control of their savings. They could aim to produce a regular income from their invested pension money while also keeping ownership of it for the future - albeit with the risk that their income was not guaranteed as with an annuity.   

Each option for accessing pension money comes with benefits and drawbacks. The best option for you will depend on your personal circumstances and many will benefit from combining different options. You can read more about those options for accessing pension money here, including how tax applies to each. 

The freedoms introduced in 2015 have given millions of people greater flexibility but they have also required a greater deal of thought and engagement to get right. To make the most of them, retirees need to understand their options and plan their approach many years in advance of actually stopping work. 

It is worrying, then, that new research from Fidelity has shown that 25% of 55-64-year-olds polled this year were still not aware of pension freedoms.1 That raises the risk that these people will hit retirement without the knowledge they need to make the most of their pension savings - or worse that they make a mistake that could see their retirement savings run out to soon. 

The good news is that there’s now a lot of help and guidance out there for those unsure of their retirement options.

For those nearing retirement, the Government’s Pension Wise service offers free, impartial guidance to help those aged 50 and over understand their choices at retirement. You can access the guidance here or call on 0800 138 3944. 

You may benefit from full independent financial advice that you pay for, and Fidelity’s Retirement Service can offer guidance and advice to help you find a solution tailored to your needs. You can find details here or by calling on 0800 368 6882.  

And for those actually accessing their pension from age 55, recently introduced Investment Pathways provide a range of ready-made options for leaving pension savings invested in a way that will suit their future needs. 

But even if you are still many years from retirement, it can still be worth thinking ahead to check your saving is on track and to consider how you’ll access your pension in the future. Fidelity’s MyPlan tool is an online calculator which allows you to enter details like your age, earnings and level of savings to work out the kind of pension pot you might be able to expect in the future. 

You might also want to think about if and when to take tax-free cash - the 25% of your pension savings that can be withdrawn with no tax to pay. Current pension rules allow you to access tax-free from age 55, although this will rise to 57 in 2028. It is not always the right call to access this tax-free money straightaway. Remember, any pension money you spend now cannot then be used to generate an income later. 

Even after six years, Pension Freedoms are taking time to become established in the minds of those hitting retirement. But help is available, so make sure you know your options to make the most of them. 


1 Research commissioned by Fidelity International and conducted by Opinium. The survey is based on a sample of 3,000 UK adults during October 2020. 

Important Information: Withdrawals from a pension product will not normally be possible until you reach age 55. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information and our guidance tools are not a personal recommendation for any particular investment. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.

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