Pension drawdown vs annuity: UK retirement options

SYM1 April 2026Retirement

When accessing your pension, you can choose between drawdown (SIPP) and annuity options. Each has different benefits and risks.

Pension Drawdown (SIPP)

Drawdown lets you keep your pension invested and withdraw as needed. You have flexibility but bear investment risk. Great if you want flexibility and expect your pot to grow.

Keep pension invested
Flexible income amounts
Investment risk is yours

Annuities

An annuity provides guaranteed income for life (or a set period). You trade flexibility for certainty. Rates depend on age, health, and interest rates.

Should I buy an annuity now?

Annuity rates have improved but remain low. Many defer buying until older when rates are better. Consider waiting if you're in good health.

Mixing Both Approaches

Many retirees use a combination: some annuity for guaranteed income, some drawdown for flexibility. This balances certainty with access to capital.

SIPP
annuity
pension
retirement
UK

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Pension Drawdown (SIPP)

Annuities

Mixing Both Approaches

Keep reading

UK State Pension: how it works

Statutory Sick Pay 2026/27: UK employee guide

Best student bank accounts for 2026/27: UK guide

Student loan Plan 2 explained: what it means for your finances

Tax-Free Childcare: how it works and who qualifies

Tax relief for working from home: what changed in April 2026