What is income drawdown?
Take money from your pension as and when you want it. Income drawdown is a retirement income strategy that allows you to withdraw money from your pension savings retaining control and offering flexibility
Flexible options
Take money as and when needed
Up to 25% tax free
Take up to 25% of your pension as tax-free cash or leave it invested to take later
Retain Control
Invest your pension fund for growth or income but always retain control of the fund
Income drawdown involves the investment of your pension savings, which can go up or down in value. Your retirement income may therefore be higher or lower than expected. It is important to regularly review your pension investments and consider the impact of inflation on your retirement income.
How it works
Learn about how income drawdown works and decide if it is the right retirement income strategy for you. Speak to our Retirement Advisers to see how income drawdown could fit into your retirement plans
Plan your tax-free cash
You have the option to take up to 25% of your pension savings as a tax-free lump sum. You can choose to receive this all at once or in multiple payments. For each tax-free withdrawal, an amount equal to three times the tax-free amount will be moved into a taxable drawdown account where it can be withdrawn as needed. Keep in mind that withdrawals from this account will be subject to income tax.
Flexible withdrawals
You can choose to take lump sum or regular withdrawals. You can increase or decrease this withdrawals whenever you need, as long as you have sufficient funds left in your drawdown account.
Our financial advisers can help you work our a sensible withdrawal strategy to ensure your pension lasts your full retirement.
Regularly reviews
Our Pension drawdown advice service offers regular reviews of your pension pot.
We’ll review your income withdrawals, investment strategy and risk profile to ensure your pension lasts as long as you do.
Considerations of Drawdown
Before deciding to take your pension as a series of lump sum payments or as regular withdrawals, there are some important factors to consider.
- You should look at all the retirement options available to your before choosing to invest in drawdown.
- There are no guarantees with drawdown. You pension fund will be subject to stock market performance which can go down as well as up.
- If you take some taxable income from drawdown, this will reduce the amount of money you can contribute to a pension in the future. This may not be an issue if you’re retired but if you are still working, this could be detrimental.
- Investment can be complex. Only look at this option if you have some investment experience, are comfortable with a fluctuating fund value or if you have a professional adviser managing this for you.
Does Drawdown meet your needs?
Before you begin withdrawing from your pension, it’s important to carefully consider whether taking your funds flexibly is the right choice for you, both immediately and in the long term
Choose how you use your Pension
Although pension are designed to provide an income in retirement, we all know there are unexpected bills or expected plans that need funding. Drawdown allows a lump sum to be taken out as and when you need it. The ability to stagger when you take the tax-free cash could allow you to help pay for your child’s wedding or fund a new bathroom.
Allow you fund to continue to grow
Moving your pension into drawdown gives it a chance of continued growth. If you buy an annuity, you lose rights to future potential growth in exchange for a guaranteed income. Drawdown allows you to take advantage of future investment growth if the markets perform. Any unused funds on your death can be passed onto whoever you wish. Funds within a pension are also shielded from Inheritance Tax Calculations in most instances.
Other ways to use your money
If you’re not sure if income drawdown is right for you, take a look at other options for taking money from your pension once you’re retired. You can see more and compare your options here.
Know exactly how much money you’ll get with our annuity that gives you a guaranteed income for the rest of your life.
Mix and match your retirement options
Choosing a few retirement options (rather than just one) could help you get the retirement lifestyle you’re after.
Taking all your pension in cash
See the impact of withdrawing your pension money as one lump sum – and what you can do instead.
Leave your money where it is for now
Not touching your money right away could make a difference to the size of your pension pot.
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