Flexi-access Drawdown

From 6th April 2015, from age 55, you can access as much of your savings from your Defined Contributions Pension Scheme (also known as ‘Money Purchase Schemes’) as you want under the new ‘pensions flexibility’ rules.

Flexi-access Drawdown

One of the ways you can access your savings is through Flexi-access Drawdown.

You can put funds into drawdown with no limits on how much or how little you can take from your drawdown fund each year. You can take a tax free pension commencement lump sum of up to 25% of your pension pot when you put funds into drawdown. Any drawdown payments are taxed as income.

Taking a one-off or regular withdrawal from Flexi-access Drawdown will affect how much you’ll be able to pay into a pension in the future and still receive tax-relief.

Capped Drawdown

You can continue in Capped Drawdown if you were in a scheme before the changes, but no new Capped Drawdown funds or Flexible Drawdown funds may be set up from 6th April 2015 onwards.

If you are in Capped Drawdown you may either convert your fund into a Flexi-access Drawdown fund or continue to take a Capped Drawdown pension form your arrangement. Speak with your pension scheme administrator if you want to convert to Flexi-access Drawdown.

You can add additional funds to your existing Capped Drawdown arrangements and your existing annual pension limits and review periods for Capped Drawdown will continue to apply. Capped Drawdown payments are taxed as income.

Things to consider when buying a drawdown plan

* Do the rule changes affect your plans?
If you’re using drawdown for the first time, you’ll be able to take advantage of the flexibility a Flexi-access Drawdown product offers.

* Other sources of retirement income
Do you have other sources of retirement income you can rely on to see you through retirement, such as a state pension?

* Regular reviews
Because your drawdown pot remains invested, you need to regularly review the performance of the funds you’re invested in and the level of any income you’re taking or pay a financial adviser to do this for you. This way you can make sure you don’t run out of money earlier than expected.

* Access to drawdown
Not all pension plans offer Flexi-access Drawdown, so you may have to transfer to another plan.

Retirement ProfessionalsFlexi-access Drawdown