If you decide to opt for drawdown, make sure you won’t sacrifice any valuable benefits by transferring.Ĭonsider talking to a financial adviser about whether drawdown is right for you, and how to put it into practice. Don’t need your pension to provide you with a regular income because you have income from other sources, such as buy-to-let properties.Want to have more control over where and how it is invested.Prefer to keep at least some of your money invested.Read more: ‘How do I use pension drawdown to access tax-free cash?’ Drawdown might make sense if you… You have to balance between taking enough cash for a comfortable retirement and keeping enough invested so the remaining pension doesn’t run out before you do. In practice, taking income when in pension drawdown is a juggling act. Find out: Should I go for an annuity or drawdown? This is different to an annuity which can give you a secure income for life but is less flexible. One of the major disadvantages of drawdown is that you could run out of money during retirement. But with drawdown, there is no guarantee your pension funds will last for the rest of your life. In an ideal world, your investments do well, and your income gets bigger each year. If you die before the age of 75, your beneficiaries also won’t have to pay income tax on the pension fund they receive.You want to pass your retirement savings to your loved ones when you die without paying an inheritance tax.You can choose how your funds are invested during retirement.Drawdown is the most flexible option, allowing you to take income as and when you like.You might want to read: Should I go for an annuity or drawdown? Pros Make sure you understand what you would get from buying an annuity so you can compare your options. There is no easy answer to this because it depends on your individual circumstances. This is an insurance product that pays a fixed income for the rest of your life in exchange for your pension savings.įind out: Should I go for an annuity or drawdown? Is pension drawdown a good idea? The main alternative to drawdown is an annuity. If you have a defined benefit pension (also known as a final salary pension), you won’t be able to use drawdown.įor more information on different types of pensions, see our pensions guide. Self-invested personal pensions (SIPPs). ![]() You can either set up a pension drawdown arrangement with your current provider or you might need to transfer your savings to a different provider.īear in mind that you can only use income drawdown for defined contribution pensions. This allows you to keep taking advantage of the 25% tax-free perk. Remember: you can move your pension savings into drawdown gradually which is known as “partial drawdown”. Savers have had this option since April 2015 when the pension freedom rules were introduced.Įach time you move your money from your pension savings into drawdown, 25% of it is tax-free. Rather than buying an annuity, savers can move their pension savings into a drawdown product, which lets them take income when they need it. Pension drawdown, also known as income drawdown or flexi-access drawdown, is a flexible way of taking cash out of your pension savings. ![]() Pension drawdown is one way to take money from your pension pot What is pension drawdown? Taking income from my pension in drawdown.Ready for drawdown? Our pick of best pension drawdown providers can help you choose. ![]() This guide tells you everything you need to know about pension drawdown, including the fees involved and tax implications so that you can choose the right provider for you. Pension drawdown is one way of taking money from your pension pot.
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