What is flexi-access drawdown?Ī term you'll hear frequently when you start investigating drawdown is flexi-access drawdown. But this rule, known as the Minimum Income Requirement, was scrapped back in April 2015 – and there are no longer any restrictions. To benefit from flexible drawdown, you used to have to prove you had additional, separate income of £12,000 a year or more. Flexible drawdown is available to those of you who no longer pay into a pension. The remainder is taxable at your normal income tax rate.Īnd there is no limit to the amount of annual income you choose to take from your fund.
You'll receive the first 25% you withdraw tax-free. There are two different types of income drawdown you may have heard of, explained here: What is flexible drawdown?įlexible drawdown gives you, well, flexibility to take out as much money as you wish from your pension pot. By choosing to access your pension via income drawdown, you can take an income for yourself from your pension, while leaving the remainder in investments, usually on the stock market. Under the drawdown rules, you can take all of your pension pot as a lump sum. How do the pension drawdown rules affect you? You have to be 55 or above - and with a private pension - to qualify. The pension rules changed back on 6 April, 2015. When are you eligible for the drawdown option on your pension? What is drawdown?ĭrawdown is the process of getting your hands on the money you've saved into your private pension pot, ie, the 'drawing down' of funds. While annuities offer a guaranteed income for the rest of the holder’s life, leaving pension cash invested in shares and other assets means it can continue to grow after you have stopped working. These changes to pension rules made it is much easier for people who reach retirement to leave their pension funds invested in the stock market, rather than being forced to buy an annuity.
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