Also check if the terms and conditions limit the type of annuity you can take. The guaranteed annuity rate could simply provide you with a level, non-increasing income for you alone that ceases upon your death. If you want to provide ongoing income to your spouse or partner, and/or include annual increases, find out if the guaranteed annuity rate applies or if it would be lower.

If the annuity does not provide the type of benefits that suits your personal situation, you can compare it to other annuity options on the market to see if you can get a more suitable offer.

A word of warning, if you decide to transfer your benefits elsewhere, such as to another annuity provider or take a drawdown, you will lose the guarantee.

Withdrawal of non-taxable sums of money from other pension savings

Severance annuity payments, including those with guaranteed annuity rates, will not prevent you from taking a tax-free lump sum of 25pc from your other pensions. This is on the condition that your total benefits do not exceed your lifetime allowance. Based on the standard lifetime allowance of £1,073,100, the maximum non-taxable lump sum is £268,275.

The lifetime allowance is a limit on the value of benefits that can be paid to an individual by registered pension schemes, either as a lump sum or income, without triggering an additional tax burden.

There are several ways to collect your other pension benefits. You can usually take up to 25% of your fund as a tax-free lump sum, with the rest to buy an annuity or withdraw. All funds withdrawn remain invested and you can withdraw as and when you wish or leave the funds untouched. Income from your annuity or retirement plan is taxed at your top marginal tax rate.

Or you can take your pension as a lump sum or a series of lump sums, if your pension fund offers this option. This is what is rather inelegantly called uncrystallized fund pension capital. Here, whenever you withdraw a lump sum, typically 25% is tax exempt, with the balance taxed at your marginal tax rate, just like any drawdown or annuity income.

As you are over the normal minimum retirement age, currently 55, and as long as there are no guarantees attached to your other pensions, it will be entirely up to you to decide when and how you will access these pensions, subject to plan rules. If in doubt, I suggest you contact your pension fund for each of your other pension plans to find out your options. You may wish to seek advice from your pension provider, Pensions Wise or a financial adviser.

Pension Physician Kate Smith of Aegon Pension Society solves your retirement problems. Write to Kate with your pension issue via [email protected] The columns are published twice a month on Tuesday mornings