The first option is to purchase an annuity with your accumulated fund. Buying an annuity will provide you with a guaranteed regular income in exchange for the value of the fund that you have built up.

If you are about to draw benefits from a Personal Pension, you have the ability to “shop around” to ensure you get the best rates available from your fund. This could increase the income you will receive substantially and advice should always be taken.

There are various options available when you purchase an annuity, for example you can arrange for it to be paid for a guaranteed period, to your spouse following your death, and at a level that increases each year either by a fixed percentage or in line with the Retail Price Index.

The major advantage of an annuity is that you, and if required your spouse, will receive a guaranteed level of income for life. However, on the downside, you will exchange the lump sum you have built up for this fixed income.

The level of income you have guaranteed cannot respond to your changing personal financial circumstances. In addition you will effectively lock into the annuity rate that is available on the day. This rate may or may not be favorable depending on current interest rates and long term gilt yields. Also, depending upon how the annuity is established, the death benefits payable to your spouse may not be as high as under other options. Finally, there is no possibility of future investment growth on your pension fund.

Other options available to you are to utilise phased retirement and/or pension fund withdrawal (otherwise know as income drawdown). Some insurance companies offer both of these options within an overall retirement options' package.