What is Income Drawdown?
When you decide you wish to retire you do have some choices about your next steps. You may opt to take an annuity that will pay you an income for life, however there are other options that may be appropriate including Income Drawdown.
There are two different types of Income Drawdown Plan
Capped Income Drawdown allows your pension pot to remain invested whilst you draw from it a regular pension. You can still take up to 25% of your fund as tax-free cash and take an income up to the equivalent amount you would receive from a level single life lifetime annuity.
Flexible Income Drawdown is more flexible that Capped Drawdown and allows you to take as much income as you like when you want it. There are qualifying criteria to allow you to take out Flexible Drawdown. You must already have a secure pension in place of at least £20,000 a year and are not still contributing to any pension plan
Income Drawdown plans allows you:
• The flexibility to vary the amount of income you take and when you take it,
• Provides more options to pass your pension fund to dependents on your death
• To leave your pension invested which obviously provides the opportunity for fund growth depending on investment performance and the level of withdrawals you take.
• Stop the plan when you wish to buy a standard annuity with the remainder of your fund.
Compare the difference between an annuity and income drawdown.
Income Drawdown is not suitable for every one and so you will need to seek Independent Financial Advice to review your options. Contact us today