Vanilla smoothie

Despite the vanilla approach - keeping things as simple as possible - choosing a withdrawal rate from your pension pot is tricky. You can see why most people don't bother trying, and just opt for a standard annuity. It's fixed, it's guaranteed, it will last as long as you live.

But here's ways to smooth your usp (aka unsecured pension, or income drawdown).

1 Invest in government gilts in your SIPP (self-invested pension scheme) or even index-linked gilts. This is a good choice for someone who wants a secure and stable return, but is not ready to lose control of their savings by handing them over to an insurance company for an annuity. This is an option that doesn't get much publicity. The returns are likely to be unspectacular - as are the fees to advisors.

2 Smooth your return by taking the average of last year's payout, and 4% of this years fund total. So if your fund is £115,000 - and last years pay out was £4000- you only pay yourself £4300 and not the £4600 that the basic 4% rule would have given you.

And because last years payout was calculated the same way this simple rule weights your return by your long-run return. (The weighting for the current year is 1/2, and for the preceding years 1/4, 1/8, 1/16 etc).

3 Increase payout with age: 4% in your fifties, 5% in your sixties, 6% in your seventies.

By the time you get to your mid sixties, this is quite conservative (especially for men - their life expectancy is several years shorter than for women). But it might feel scary - your pension pot might be going down. This is not just living on income - it's eating into capital too

So is a SIPP preferable to an annuity? It comes down to personal choice - but one big factor is that you can always change your mind and buy an annuity - but you can't change it back again.