The principle is very simple. Usually you take some or all of your tax free cash sum and then leave the remainder of your fund invested. Each year, you decide how much income you need. The income is disinvested and then paid to you through the payroll each month, or less frequently as required. The income is taxed as usual.
If the funds continue to grow, then the income you have taken will be partly or wholly replaced by investment return and then you repeat the exercise each year until and if you decide to buy a pension.
By taking some of your benefits, you will change the benefits payable on your death so you need to think about this as well.
This option is not right for everyone and you should consider taking advice from an Independent Financial Adviser.
The information on this page is provided in good faith but is not legal or financial advice or binding on the Trustee. The trust deed and rules will override in the event of any inconsistency.
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