PENSION DRAWDOWN
Pension drawdown is a way of using your pension fund to provide you with a regular retirement income, whilst your fund remains invested. This means there is a potential for the income you receive to vary, depending on the performance of your investments.
EASY-VIEW OPTIONIncome Drawdown
Income drawdown gives you the ability to take 25% of your fund Tax-Free and leave the remaining 75% invested. You can draw an income from your invested fund at a time to suit you, whether that be a regular amount or as and when you require capital.
Flexi-Access Drawdown
The Flexi-Access option is now the only option available for those who take their pension benefits for the first time after 6th April 2015. You can withdraw cash when you need it, however there may be a charge for each withdrawal or a limit to the number of withdrawals made each year.
Capped Drawdown
Currently if you are in capped drawdown you will have a maximum level of income that you can take each year and this is reviewed every three years up until you are 75 and annually thereafter.
From 6 April 2015 you are able to continue to take capped drawdown or you have the option to switch to the new flexi-access drawdown whereby the amount of income you can take will be unlimited and there will be no further maximum income level reviews.
It is important to remember that if you take the decision to move from capped drawdown to flexi-access drawdown and take any income from the flexi-access drawdown fund the amount you can contribute to money purchase pensions each year without suffering a tax charge will reduce.
Things To Consider
When planning how much income you can afford to take from your pension fund there are some things you need to carefully consider; you may live longer than you expect, your investments may not perform as well as you expected, not all pension scheme/providers offer the flexi-access option and any income drawn is subject to Tax. Flexi-access is a complex pension product - allow us to simplify it for you by clicking the link below
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