Pension Drawdown

Pension Drawdown

Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Pension Drawdown

Planning for your retirement is one of the most important decisions you will make – a pension drawdown offers an alternative to buying an annuity for those who do not need a guaranteed income in retirement.

If you are comfortable with and can afford, the risk of keeping your pension funds invested drawdown gives you more flexibility of when (after the age of 55) and how much income that you can take. Considerations should also be made before taking your pension.

How does it work?

With a pension drawdown you will have more control over your retirement income, as you decide how you want to take your pension. You are able to take an income when you require it, leaving your pension pot invested. When you withdraw money you also have the option to take 25% of it tax-free.

What are the pros and cons?

As with any arrangement, there can be advantages and disadvantages.

  • Your money remains invested
    • While this provides an opportunity for growth it also creates the risk of loss. For those who are comfortable with the risks and can afford to take them
  • Greater flexibility
    • Drawdown undoubtedly provides more flexibility in when and how much money you can take. However, you should be realistic about the likelihood that you will use that flexibility, and whether it is worth accepting the investment risk inherent in drawdown.
  • Reduce tax
    • The flexibility of when and how much to take can mean that you may be able to reduce your tax bill if you have other income or assets to rely on
  • Death benefits
    • If you die with funds remaining in your drawdown plan they can be inherited by your family members and loved ones which will also have the same flexibility when and how to take money from the plan.

How Pensionlite can help?

To find out more about pension drawdown you can contact our expert team of advisers. They will provide you with advice and recommendations in an easy to understand format based on your own personal plans, the options available and your unique needs and circumstances.

We will communicate with you by post, email, text and telephone as well as face to face, at your convenience with an adviser available, on the phone, to answer any questions and address any queries, once you have had time to read your recommendation report and made note of any questions.