What rights do I have to a lump sum?

This depends on the kind of money purchase pension you have.

• You cannot take a lump sum from an 'appropriate personal pension' which you get in return for individually opting out of a second pension from the state. This goes for any element of any money purchase scheme that is funded from contracting out.
• You can take up to 25 per cent of a stakeholder, personal, AVC or FSAVC pension as a lump sum.
• The amount you can take from an occupational scheme will depend on the scheme rules, but cannot be greater than 1.5 times your final salary or 2.25 times your pension.

Of course if you take a lump sum you will have a smaller amount left with which to buy an annuity and thus get a smaller pension, but you can use your lump sum to buy what is called a 'purchased life annuity' rather than a pensions annuity. This has some tax advantages.

The FSA has a downloadable guide with more information on this whole area here.