The short answer

Drawdown keeps your pension invested and lets you take income as you need it: flexible, potentially growing, and whatever's left passes to your family — but income isn't guaranteed and you carry the market and longevity risk. An annuity converts part of your pension into a guaranteed income for life — rates are high in 2026, at over £8,200 a year per £100,000 for a healthy 65-year-old on a level basis — but most don't rise, and the money is gone when you die unless you choose protection. Most expats in Thailand do best with a mix: secure income (State Pension, any final-salary pension, perhaps an annuity) covering essentials, and drawdown, offshore bonds and savings covering the rest. Lawrence offers a free review to build that plan.

Your possible sources of retirement income

Most retirees in Thailand have three or four of these. The skill is in combining them: deciding which to draw from first, which to keep for later, how to keep tax low in both countries and how to make sure the essentials are always covered.

Pension drawdown explained

With flexi-access drawdown, your pension stays invested and you take money from it when you choose — a regular monthly income, occasional lump sums, or a mixture. You can usually take up to 25% tax-free (within the £268,275 Lump Sum Allowance), either at the start or in stages, with the rest taxable as income.

Strengths

• Flexibility — take more in your active early years, less later, or adjust as needed.
• Growth potential — your money stays invested, which matters over a 30-year retirement.
• Family — what's left can pass to your beneficiaries.
• Currency choice — many expat pensions let you hold several currencies.

Risks

• No guarantee — income depends on investment returns.
• Running out — taking too much, or a market fall early on, can exhaust the pot.
• Decisions — someone has to manage the investments and withdrawals.
• Contribution limit — once you draw flexibly, future pension contributions are limited to £10,000 a year.

How much can you safely take?

The biggest question in drawdown is how much you can take without running out. Morningstar's 2026 research on UK retirees found that a starting withdrawal of about 4.1% of the pot, then increased each year with inflation, had a 90% chance of lasting 30 years — most reliably in a portfolio with around 30% in shares. An all-share portfolio supported only about 3.4% on the same basis.

Flexibility changes the picture. Morningstar found that strategies which adjust withdrawals to market conditions — taking a little less after bad years — could support starting rates of around 5.7%. The trade-off is that your income moves around more from year to year.

In practice, most retirees in Thailand don't need to rely on a single rule. With essential spending covered by secure income such as the State Pension, drawdown can be used more flexibly for everything else. And a cash buffer of a year or two means withdrawals never have to be taken from investments after a fall. Our guide to investment risk and capacity for loss explains sequence risk — the danger of a fall early in retirement — in more detail.

Annuities explained

An annuity converts some or all of your pension into a guaranteed income, usually for life. Once bought, it's paid whatever happens to markets and however long you live.

Annuity rates are currently high by recent standards. According to Which?, a healthy 65-year-old with £100,000 could buy a level single-life annuity paying up to £8,237 a year in October 2026. A joint-life annuity paying half to a surviving spouse paid up to £7,862, and one rising 3% a year started at up to £5,745. People with health conditions may qualify for higher "enhanced" rates.

Strengths

• Certainty — a guaranteed income for life.
• Longevity protection — you can't outlive it.
• Simplicity — no investment decisions.
• Peace of mind — ideal for covering essential spending.

Points to consider for expats

• Level annuities don't rise — and, paid in pounds, they're exposed to the exchange rate.
• Rising annuities start much lower.
• Usually irreversible — once bought, you can't change your mind.
• Less to pass on — unless you choose a guarantee period or value protection.
• Paying abroad — check that the provider will pay to a Thai or UK account as you prefer.

Drawdown and annuities compared

The two main ways to take income from a defined contribution pension.

General comparison. Many retirees use both — an annuity for essentials and drawdown for the rest.

Annuity options explained

If you buy an annuity, these choices shape how much it pays and who it protects.

Shop around — rates vary widely between providers, and you don't have to buy from your pension provider.

How retirement spending changes over time

Retirement isn't one long, even stretch. Many people's spending follows a rough pattern, and your income plan can follow it too.

The active years

In the first ten years or so, many retirees in Thailand spend more: travel around Asia, trips home, golf, diving, entertaining family who visit. Drawdown's flexibility is valuable here — you can take more when you're most able to enjoy it.

The slower years

Later, spending on travel and activities often eases, even as everyday costs rise with inflation. Income needs may level off, and a steady, reliable income becomes more important than flexibility.

The later years

In the final stage, healthcare and care costs can rise sharply — and in Thailand, without the NHS, they're paid privately or through insurance. Keeping part of your savings invested for this stage, and maintaining good health cover, is essential.

A good plan shapes income to these stages rather than assuming the same spending every year — which can let you enjoy more in the early years with confidence.

Annuities don't have to be now-or-never

One of the most useful facts about annuities is that you don't have to decide at 65. Annuity rates rise with age, because the income is expected to be paid for fewer years. Many retirees start in drawdown, enjoying flexibility and growth in their active years, then use part of the pot to buy an annuity in their seventies, when rates are higher and a guaranteed income matters more.

That approach keeps options open — but it carries the risk that markets fall or annuity rates drop before you buy. Reviewing the choice every year or two, and watching your health and spending, lets you pick the right moment.

The best of both: mixing your income

For most retirees, the question isn't drawdown or annuity, but how much of each. A widely used approach is to build retirement income in layers:

1. The floor — secure income that covers essential spending: the State Pension, any final-salary pension and, if needed, an annuity.
2. The buffer — one to two years of spending in cash, mostly in baht.
3. The flexible layer — drawdown, offshore bonds and savings for travel, treats and one-off costs.
4. The legacy — investments left to grow for later life and for your family.

For expats in Thailand, the floor has a twist: the State Pension is frozen, and level annuities don't rise either. So a floor that covers essentials at 65 may not at 80. The flexible layer, invested for growth, needs to be ready to take up the slack — or part of the floor can be built from a rising annuity or a final-salary pension that increases each year.

Where to start

Someone to build your retirement income plan, and the right way to bring that income to Thailand.

Other sources of retirement income

Offshore bonds

Many expats hold savings in an offshore bond. Under UK rules, you can usually withdraw up to 5% of what you invested each year for 20 years without an immediate UK tax charge, making bonds a natural partner to pension drawdown. Our guide to offshore investment structures explains how they work.

ISAs

You can keep ISAs you opened while UK resident, and they remain free of UK tax on income and gains — but you can't usually pay new money in while you're non-resident. Thai tax may apply to income or gains you bring into Thailand.

Cash and deposits

Cash is your buffer, not your income engine — but a well-sized baht reserve lets every other source be drawn at the right time.

Rental income

Many expats keep a UK property and let it. Rent provides an income that may rise over time, but it's taxed in the UK, can be interrupted and ties up capital. Thai tax may also apply when it's brought in, with credit for UK tax under the treaty.

Final-salary pensions

If you have one, it's usually the best "annuity" you'll ever own: guaranteed and often rising, even in Thailand. It belongs at the heart of your income floor.

Running drawdown from Thailand

Drawdown isn't a one-off decision; it's an ongoing job. Someone needs to choose the investments, decide how much to withdraw each year, rebalance after market moves, top up the cash buffer, keep an eye on tax in two countries and make sure the pension is still on course to last. Some retirees enjoy doing it themselves. Many would rather spend their time enjoying Thailand.

A typical year of well-run drawdown looks like this:

1. A yearly review of the pot, the withdrawal rate and your spending.
2. Rebalancing back to the agreed mix of investments.
3. Refilling the baht buffer from whatever has done best.
4. Setting next year's income — and fixing the exchange rate if you want certainty.
5. Checking the tax position in Thailand and the UK.
6. Updating beneficiaries after any family change.

Lawrence offers ongoing reviews for expats in Thailand who want their drawdown looked after — so the income keeps arriving, the pot stays on track and you don't have to think about it more than once a year.

Which to draw from first?

The order you draw from your sources can make a real difference to tax and to how long your money lasts. There's no single rule, but common principles include:

• Use allowances every year — such as Thai personal allowances and any UK personal allowance.
• Bring in capital before gains where Thai tax rules make that more efficient, with good records.
• Use the 5% bond allowance alongside pension drawdown.
• Spread tax-free pension cash over several years rather than taking it all at once, where it helps.
• Keep the pension invested longer if it's efficient for passing on — but plan for inheritance tax on unused pensions from April 2027.
• Refill the cash buffer from whichever source has done best.

Because the rules in both countries interact, this is one area where a personal plan pays for itself.

Tax on retirement income in Thailand

If you spend 180 days or more in Thailand in a calendar year, you're Thai tax resident, and since 2024 foreign income — including pension drawdown, annuity income, rent and investment gains — brought into Thailand can be taxable. Income earned before 2024 is protected. Thailand offers a ฿60,000 personal allowance, an extra exemption of up to ฿190,000 for those aged 65 or over, and 0% tax on the first ฿150,000 of net income.

In the UK, pension income is taxable, but the UK–Thailand treaty decides which country has the right to tax each type of income, with relief so you're not taxed twice in full. Government service pensions are generally taxed only in the UK. Our tax residence guide explains the rules, and a plan that considers both countries can often keep tax surprisingly low.

Currency: income in pounds, life in baht

Whichever income you choose, it will usually arrive in pounds, while you spend in baht. Annuities and the State Pension are fixed in pounds, so a weaker pound hits them directly; drawdown can be held partly in other currencies. Keep a baht buffer, convert regularly at a good rate, and consider fixing the rate for a year's income. Our guide to currency risk on overseas pension income explains how.

Three worked examples

Geoff and Pim: a floor and flexibility

Geoff, 66, and his wife Pim, 58, live in Hua Hin. Geoff has a full State Pension and a £300,000 pension pot. Lawrence uses £100,000 to buy a joint-life annuity so Pim is protected if Geoff dies first, keeps £200,000 in drawdown for flexible income and growth, and builds a two-year baht buffer. Their essentials are covered for life; the drawdown funds travel and treats.

Mike: drawdown with a bond

Mike, 63, in Chiang Mai, has a £250,000 pension and a £150,000 offshore bond. He takes a modest drawdown, adds 5% a year from the bond and keeps two years of spending in baht. He adjusts withdrawals after poor market years, following a flexible strategy that supports a higher starting income.

Carol: a final-salary pension at the heart

Carol, 67, a retired teacher in Pattaya, has a final-salary pension that rises each year and a frozen State Pension. Together they cover her essentials. Lawrence invests her savings for growth and sets a flexible withdrawal plan, so her income keeps pace with rising Thai costs.

The mistakes we see most often

1. Taking too much from drawdown in the early years.
2. Buying a level annuity without thinking about inflation and currency.
3. Taking all tax-free cash at once without a purpose.
4. No cash buffer, so withdrawals follow a market fall.
5. Ignoring the frozen State Pension in a 30-year plan.
6. Forgetting Thai tax on income brought in.
7. Not protecting a spouse when choosing an annuity.
8. Never reviewing the withdrawal rate.

Your retirement income checklist

• Add up your essential spending in baht.
• List every income source and how secure each is.
• Cover essentials with secure income where you can.
• Choose a sustainable drawdown rate for the rest.
• Compare annuity quotes — including joint-life and rising options.
• Plan tax-free cash and the order of withdrawals.
• Keep a baht buffer and plan the currency.
• Review once a year.

Keeping your retirement income secure

• Contact providers yourself using details from your own statements.
• Be wary of unsolicited annuity or drawdown offers.
• Use strong passwords and two-factor sign-in on every account.
• Use a private, protected connection on hotel, café and condo Wi-Fi.

How we researched this guide

We used Which?'s annuity rate tables (12 October 2026, from the MoneyHelper calculator), Morningstar's The State of Retirement Income UK 2026 on sustainable withdrawal rates, Aberdeen's technical guidance on the money purchase annual allowance, and our earlier guides on pension allowances, offshore bonds, Thai tax and currency risk. Illustrations are simplified and not a forecast. Checked 13 October 2026. This guide is general information, not personal financial advice — retirement income decisions, especially buying an annuity, are often irreversible.