Benefit options

The main purpose of a pension is to provide a member with an income when they reach a certain age and would like their retirement benefits. There are different options available depending on their circumstances.

The basics

This analysis focuses on when benefits can be taken, summarises the main options available and also looks at the restrictions that apply.

Emergency rate tax

An explanation of when emergency rate tax applies and how to get it back.

Income drawdown

One of the most popular options is income drawdown. There are two types: capped and flexi-access drawdown.

Flexi-access drawdown

Since 6 April 2015 any new drawdown plans must be a flexi-access drawdown plan. 

Capped drawdown

New capped drawdown plans were only available until 6 April 2015. Existing plans can continue as long as the GAD limit is not exceeded.

Lump sums

Sometimes it's possible to exchange all pension benefits for a one-off lump sum.

Lifetime allowance

There is a maximum amount that can be taken from a pension scheme without being subject to a tax charge. This is called the lifetime allowance and fittingly the tax charge is called the lifetime allowance charge.

It is currently possible to protect benefits from a lifetime allowance charge as a result of the lifetime allowance being reduced. This protection has the effect of locking the lifetime allowance at a certain rate, meaning the reduction won't apply. However, there are conditions which, if broken, will result in protection being lost.


Once benefits have been taken, it is possible to re-use this money and pay it back into a pension. However, you won't be surprised to hear that there are rules and restrictions in place.



Last updated: 08 Feb 2018

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.