When you reach 55, you have several ways to access your pension. Each option has its pros and cons, so it’s worth considering financial advice if you're finding it hard to decide. Here’s an overview of the most common options:    

1. Do Nothing: You can leave your pension as it is and let it keep growing until you’re ready.    

2. Take Your Full Pension Pot: You can withdraw your entire pension pot as a one-off cash sum. The first  25% is tax-free, while the remaining 75% is taxed as income. This could push you into a higher tax bracket depending on the size of your pot. Important: Taking your full pot means that, from now on, the most you can  contribute to any pension each year will drop to £10,000. This limit (called  the MPAA) applies even if your income changes in the future.    

3. Take Smaller Lump Sums: You can take smaller amounts as and when you need, leaving the rest of your  pension invested. For each withdrawal, 25% is tax-free, with the rest taxed as income. Important: The first time you take a lump sum, the MPAA rule kicks in. This means the maximum you’ll be able to add to any pension each year will reduce to £10,000 from that point on.    

4. Take a Tax-Free Lump Sum, Then Withdraw Gradually: You can take up to 25% tax-free and leave the rest invested, drawing on it  as regular income or occasional lump sums. Future withdrawals are taxed at  your income rate. This approach won’t trigger the MPAA until you make additional  withdrawals.  

5. Buy an Annuity: Withdraw 25% tax-free, then use the rest to buy an annuity, which gives you  a guaranteed income for life or a set period. Income from an annuity is  taxed, but it doesn’t trigger the MPAA unless it’s investment-linked. Compound doesn't offer annuities, however you can take your 25% tax free, and we can then transfer the remainder of your pot to your chosen annuity  provider.    

6. Combine Options: You can mix and match any of the above methods to suit your needs, like  taking a 25% tax-free lump sum and then drawing regular income through  drawdown.    

Remember: If you are still unsure about what drawdown method suits you, speak to a financial advisor to get personalised advice tailored to your situation.  

Tax relief rules may vary depending on individual circumstances, and future rates may change based on UK tax regulations.