Pension income drawdown options

Flexi-Access Drawdown & Capped Drawdown Options

These are particularly good retirement options and, realistically, are most appropriate for anyone who has pension capital of at least £100,000 left after the payment of their tax-free cash lump sum.

Generically, Pension Drawdown allows an income to be taken directly from the fund itself. It also enhances your retirement options by letting you put off an annuity purchase until a time when it’s more suitable. And these plans still allow up to 25% of the retirement fund to be taken as Tax Free Cash.

These schemes are quite complex and not suitable for everyone. But they can offer a more flexible approach to retirement income.

Not all schemes offer the option of income drawdown
There are two types of drawdown – flexi-access drawdown (FAD) and capped drawdown
Flexi-access drawdown allows as much or as little income to be taken whenever needed. However, taking income under flexi-access drawdown normally means that the most that can be paid into your pensions reduces to £4,000 a year
There’s an annual limit to how much income can be taken under capped drawdown and capped drawdown is only available to those who were already in it before 6 April 2015You don’t have to stay in drawdown – if you want to, you can use the funds to buy an annuity at a later date
On death, beneficiaries can use income drawdown, allowing the pension pot to pass down the generations

Please note: Increase from 2028 – There is an intention to link the earliest date you can take retirement benefits to the age individuals can access their State Pension, from 2028. This would mean that when State Pension age increases to 67 in 2028, the normal minimum pension age will also increase from 55 to 57. From then on it will remain 10 years below the State Pension age.

The change will affect most people born after March 1973, although public service schemes for Firefighters, Police and the Armed Forces are unlikely to be affected by the change. You might want to talk to us first before considering this option.