The terms you will meet when comparing drawdown plans, in plain English. Rules and allowances are for the 2026/27 tax year and can change. Last updated 23 September 2026.
Ad-hoc withdrawal
A one-off payment from a drawdown pot, as opposed to a regular income. Most platforms pay these free, but some charge per withdrawal — our comparison shows the charge where it is published.
Annuity
An insurance product that turns some or all of your pension into a guaranteed income, usually for life. Unlike drawdown, the income cannot run out, but you give up flexibility and the pot is normally no longer yours to pass on.
Beneficiary drawdown
When someone who inherits your pension keeps it invested and takes money from it as and when they need to, rather than taking it all as a lump sum. Not every provider offers it, so it is worth checking if leaving your pension to family matters to you.
Capped drawdown
An older form of drawdown with a limit on how much income you can take each year. No new capped drawdown plans could be started after 5 April 2015; existing ones can continue or be converted to flexi-access drawdown.
Cash interest (retained interest)
Interest earned on uninvested cash in your pension. Some platforms pass on most of it; others keep part of it as income. The FCA has been looking at this practice, sometimes called double-dipping.
Crystallisation
The point at which you start taking benefits from part or all of your pension — for example by moving it into drawdown or buying an annuity. It is usually when tax-free cash is taken.
Dealing charge
A fee each time you buy or sell an investment on a platform. Many platforms deal in funds free but charge for shares, ETFs and investment trusts.
Emergency tax
When you first take taxable money from a pension, the provider often has no up-to-date tax code and applies an emergency code, which can mean paying too much tax at first. You can reclaim it from HMRC or it is corrected later in the tax year.
ETF (exchange-traded fund)
A fund that trades on a stock exchange like a share, usually tracking an index. ETFs are often low cost, but some platforms charge a dealing fee each time you buy or sell them.
Exit fee
A charge for transferring your whole pension to another provider. Most platforms in our comparison do not charge one; check the provider's charges schedule before transferring in.
Flexi-access drawdown (FAD)
The standard way to take a flexible income from a defined contribution pension: the pot stays invested and you withdraw as much or as little as you choose. Every platform in our comparison offers it.
FSCS
The Financial Services Compensation Scheme, which can pay compensation if an authorised financial firm fails. For eligible investment claims the limit is £85,000 per person per firm. It does not protect against investments falling in value.
Inheritance tax on pensions
From 6 April 2027, most unused pension funds and death benefits are due to count towards the value of an estate for inheritance tax. Pensions left to a spouse or civil partner remain exempt. This changes how some people plan to use or pass on their pension.
Investment pathways
Four ready-made investment options that drawdown providers must offer to people who move into drawdown without advice, each linked to a plan for the money — for example, taking it all within five years or using it for a long-term income.
Lump Sum Allowance (LSA)
The limit on the total tax-free cash most people can take from their pensions during their lifetime: £268,275, unless they hold a protection that gives a higher amount.
Money Purchase Annual Allowance (MPAA)
Once you take taxable money from a defined contribution pension flexibly — such as a drawdown income or a UFPLS payment — the amount you can pay into defined contribution pensions with tax relief falls to £10,000 a year. Taking only tax-free cash does not trigger it.
Normal minimum pension age
The earliest age you can usually take money from a personal pension: currently 55, rising to 57 from 6 April 2028, unless you have a protected pension age.
Ongoing charges figure (OCF)
The yearly cost of running a fund, expressed as a percentage and taken from the fund's value. It is charged on top of the platform fee, which is why our comparison shows fund charges separately unless a provider quotes an all-in fee.
Pension commencement lump sum (tax-free cash)
The tax-free lump sum you can normally take when you start drawing a pension — usually up to 25% of the amount you crystallise, within the Lump Sum Allowance.
Phased drawdown
Moving your pension into drawdown in stages rather than all at once, taking a slice of tax-free cash each time. It can spread tax-free cash across several years.
Platform fee
The yearly charge for holding your pension with a provider. It may be a percentage of your pot (often tiered or capped) or a flat £ fee. This is the main charge our comparison ranks.
Sequence of returns risk
The risk that poor investment returns early in retirement, while you are also taking withdrawals, cause a pot to run out much sooner than the same returns in a different order would.
SIPP (self-invested personal pension)
A personal pension that lets you choose your own investments from a wide range, such as funds, ETFs, shares and investment trusts. Most SIPPs offer flexi-access drawdown.
UFPLS (uncrystallised funds pension lump sum)
Taking a lump sum straight from a pension that has not yet been moved into drawdown. Usually 25% of each payment is tax-free and the rest is taxed as income. Some platforms charge per UFPLS payment.
Withdrawal rate
The share of your pot you take out each year. Higher rates raise the chance of running out of money; rules of thumb such as 3–4% are only a starting point, not a guarantee.