Advisers say these arrangements are only suitable for people with funds of £100,000 or more (before taking any tax-free cash), or with other sources of retirement income, who may be willing to take a higher degree of risk.

The chief advantages of income drawdown is flexibility and control. Unlike a conventional annuity where income is fixed for life, individuals can invest their funds the way they like, drawing cash when they need to. If you die before age 75, the funds can be passed to your beneficiaries, subject to a 35 per cent tax charge.