PENSION OPTIONS · CHECKED 4 NOVEMBER 2026
Pension drawdown vs annuity
Understand flexibility, guaranteed income and the trade-offs.
Drawdown generally leaves pension money invested while you take withdrawals. An annuity exchanges money for an agreed income. These are different ways to use defined contribution savings.
Compare the basics
| Question | Drawdown | Annuity |
|---|---|---|
| How does income work? | You choose withdrawals | Contractual payments |
| Main consideration | Investment losses and running out of money | Terms, inflation protection and survivor benefits |
| Flexibility | Usually more control | Usually difficult to change after purchase |
Can I combine options?
You may be able to use different options for different parts of your savings. Compare charges, guarantees and tax consequences before deciding.
This comparison does not select a product for you. Source: MoneyHelper pension pot options.