What is a flexible drawdown pension?įlexi-access drawdown, also known as flexible drawdown, is the term for a drawdown pension that allows you to take as much or as little income from your pot as you like with no maximum limit.Īny new income drawdown arrangements entered into since 6 April 2015 will automatically be flexible drawdown pensions. You can also ask your capped drawdown provider to convert your plan to a flexible drawdown pension. Should the maximum income limit be exceeded, the plan will automatically be converted to a flexi-access drawdown pension. The maximum income limit is reviewed every 3 years until the anniversary of entering drawdown after your 75th birthday, then annually thereafter. The maximum income limit is 150% of the amount you would have received if you purchased a comparable lifetime annuity and is based on tables published by the Government Actuary’s Department. However, existing capped drawdown plans can continue and you may be able to add further pension funds to the plan. It is no longer possible to open a new capped drawdown pension.
#Drawdown on pension full
Those in capped drawdown retain their full annual allowance of £40,000 provided they stay within their income limit. There are two types of drawdown pensions:Ĭapped drawdown pensions are subject to a limit on the maximum amount that can be drawn as income during a year. You even have the ability to stop taking an income from your pension, either temporarily or permanently, in line with your requirements.įunds held within a drawdown pension can also be used to purchase an annuity at any given point in the future, should you wish to do so. You can control the frequency and the amount of income you take to suit your needs.
Income drawdown allows you to take a flexible income directly from your pension as and when you need it, whilst leaving your remaining pot invested. One option available to you is income drawdown What is income drawdown? If you want to take up to 25% of your pension as a tax-free lump sum, there are a number of different ways you can use your remaining pot to provide you with an income. Taking an income from your pension can be confusing.
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