When you retire, you don’t have to go down the route of purchasing your pension known as an annuity. You can consider Income or Pension Drawdown
Income Drawdown
For many people who have spent a large portion of their working life (if not it all) paying into a pension, you may be unhappy to know an annuity provider could end up keeping hold of your money if you die in the early years.
There is an alternative to purchasing a pension on retirement which allows your pension to remain invested and for you to take a portion from the pot each year as an income, hence the phrase ‘Income Drawdown’.
Income Drawdown, which from April 2006 became known officially as Unsecured Pension and from April 2011 will be known as Capped Drawdown and Flexible Drawdown– has the advantage of possibly leaving your family some legacy when you die, as your pension pot (after a tax of 55%) passes on to your family according to your wishes.
However, there are risks with opting for Income Drawdown.
- Your income is not guaranteed for life: you only have an income so long as you have a pension pot, so if you empty your pot you will face later retirement with a much reduced income.
- As well as this, because your pension remains invested, the value of it could go down – at a time when you’re probably not in a position to “replace” this loss with new money.
Principally, a Pension Drawdown plan allows you to unlock the tax-free cash from your pension plans without taking out an annuity. You retain ownership of the funds and the funds continue to be invested. A pension drawdown is an alternative to an annuity which gives greater flexibility.
The main features of a Pension Drawdown plan are:
- You can take a 25% tax-free lump sum from age 55
- You can take an income between 0 and 100% of the rate set by the Government Actuaries Department (GAD). More information can be given by one of our advisers on this complicated method of calculating the level of income.
- The income you withdraw can be varied at any time up to the maximum amount to suit your needs or control your tax liabilities
- The maximum income is reviewed and recalculated every three years currently
- You can transfer any number of pension plans (personal and occupational) to one single income drawdown plan
- You retain ownership of your pension fund and control of your investment
- Choice of death benefits for dependents
- Your Spouse can receive 100% of your fund on your death
Income Drawdown Plans in place before 6 April 2011
If you started an Income Drawdown plan before 6 April 2011, you will have to convert to the new rules, or purchase an annuity. There are transitional rules in place, giving you a deadline to do this.
The new income drawdown rules are as follows:
- There is no minimum amount of income that must be drawn, irrespective of age. This means that individuals may be able to leave their pension fund untouched for as long as they like, without the necessity to drawing any income.
- The maximum amount of income that may be drawn is reducing. The new maximum amount of income that may be drawn is 100% of the single life annuity that somebody of the same sex and age could purchase based on Government Actuary’s Department rates. An individual’s pension provider calculates the maximum income, using standard tables prepared by the Government Actuary’s Department (GAD).
- The maximum income will generally be reviewed every three years until age 75 and annually from age 75, based on the Government Actuary’s Department rates for an individual of the same age at the time of each review.
- Tax-free cash lump sums may now be paid after age 75 where an individual has elected to set aside or ‘designate’ funds for income drawdown at the same time, even if they decide to take no income.
If you are considering using income drawdown or delaying taking your tax-free cash lump sum and starting your pension after age 75, your The London Investor adviser will check whether your pension provider is offering these options, and help you make the right decision.
How does Income Drawdown work?
Income Drawdown plans allow you to take benefits (tax-free cash and an income) from your pension funds without buying an annuity. From April 2010, the minimum age that you are able to take benefits is 55 (previously 50).
Income Drawdown (or Capped Drawdown and Flexible Drawdown) allows you to take benefits from your pension before the normal retirement age of 60 or 65, (sometimes referred to as “unlocking your tax free cash). Some people want to unlock their tax free cash early to use the funds to clear debts or repay a mortgage and the present rules allow you to do this from age 55. You do not have to stop work in order to take your benefits. You must bear in mind though, that by taking the tax-free cash (and any income) early you are reducing the funds available for you when you retire.
From the time of taking benefits (known as crystallising your fund) you can use Pension Drawdown to take both tax-free cash and an income. The fund remaining after taking tax-free cash is still invested as a pension fund, continuing to benefit from a tax efficient environment in the same way that it did prior to taking any benefits.
As always you must consider both the advantages and disadvantages of Income Drawdown.
Advantages
- Access to tax-free cash immediately
- Flexibility to vary your income according to your requirements
- Control the level of income tax you pay
- Control of your investment
- Funds benefit from investment growth in a tax-efficient environment
- Choice not to purchase an annuity
- Option to take unlimited amounts if you meet the MIR (see Flexible Drawdown)
- Choice of death benefits for dependents
Disadvantages
- Future investment returns are not guaranteed
- High withdrawals of income may not be sustainable
- The higher the level of income withdrawal chosen the less that may be available to provide for dependants
- Increased flexibility brings increased administration costs
- The level of income may change due to the reviews
Speak to The London Investor about Income Drawdown and we will help you decide if this is an appropriate option for you.
77 Comments
lesbian dating sites free
(July 2, 2021 - 4:41 pm)free dating singles sites
keto chocolate chip cookies
(July 6, 2021 - 7:31 pm)omad keto
keto cereal
(July 6, 2021 - 7:57 pm)keto tacos
keto diet testosterone
(July 6, 2021 - 8:18 pm)carrots on keto
gay dating newsletter
(August 9, 2021 - 7:09 pm)dating gay jewish online https://gaydatingzz.com/
black discrimination gay dating
(August 10, 2021 - 12:33 pm)dating a deaf gay man https://freegaychatnew.com/
patrick taylor gay dating
(August 10, 2021 - 12:41 pm)does zoosk have gay dating https://gaychatus.com/
gay dating sites for older men
(August 10, 2021 - 10:03 pm)gay dating norway https://gaychatgay.com/
instant natural dapoxetine
(August 14, 2021 - 8:34 pm)instant natural dapoxetine
Income Drawdown – Investoo – The London Investor
hydroxychloroquine patient assistance program
(August 14, 2021 - 11:04 pm)hydroxychloroquine patient assistance program
Income Drawdown – Investoo – The London Investor
zithromax side effects in children
(August 27, 2021 - 1:51 pm)zithromax side effects in children
Income Drawdown – Investoo – The London Investor
hydrochlorothiazide adverse effects
(September 2, 2021 - 1:39 pm)hydrochlorothiazide adverse effects
Income Drawdown – Investoo – The London Investor
atorvastatin calcium tablet
(September 4, 2021 - 10:17 pm)atorvastatin calcium tablet
Income Drawdown – Investoo – The London Investor
prilosec at walmart
(September 7, 2021 - 4:17 pm)prilosec at walmart
Income Drawdown – Investoo – The London Investor
zoloft side effects weight loss
(September 7, 2021 - 10:03 pm)zoloft side effects weight loss
Income Drawdown – Investoo – The London Investor
seroquel depression
(September 8, 2021 - 1:13 am)seroquel depression
Income Drawdown – Investoo – The London Investor
gay speed dating dallas tx
(September 8, 2021 - 12:44 pm)black gay men dating sites https://dating-gaym.com/
how to dilute ivermectin paste
(October 18, 2021 - 7:13 pm)how to dilute ivermectin paste
Income Drawdown – Investoo – The London Investor
generic sildenafil 100mg india
(October 18, 2021 - 11:20 pm)generic sildenafil 100mg india
Income Drawdown – Investoo – The London Investor
casinos online usa
(October 19, 2021 - 7:53 am)casino welcome bonus no deposit https://online2casino.com/
online casino usa real money no deposit bonus
(October 19, 2021 - 8:36 am)gambling casino online bonus https://onlinecasinos4me.com/
ivermectin for tapeworms
(October 21, 2021 - 7:08 pm)ivermectin for tapeworms
Income Drawdown – Investoo – The London Investor
ivermectin cats
(October 24, 2021 - 12:56 am)ivermectin cats
Income Drawdown – Investoo – The London Investor
casino sign up bonus no deposit
(October 27, 2021 - 12:08 am)play mobile casino https://casinosonlinex.com/
mobile gambeling
(October 27, 2021 - 9:59 am)mobile casino real money https://casinoonlinek.com/
online casinos with no deposit bonus
(October 27, 2021 - 12:24 pm)casino games win real money https://casinoonlinet.com/
cheap custom essay writing service
(October 29, 2021 - 5:30 pm)write my essay online https://buy1essay.com/
write my essay for cheap
(October 30, 2021 - 5:58 am)writing personal essays https://dollaressays.com/
best online essay writing service
(October 30, 2021 - 7:11 pm)writing compare and contrast essays https://student-essay.com/
best free 3d sex games
(November 24, 2021 - 12:37 pm)naked college sex games https://cybersexgames.net/
downloadable furry breeding sex games
(November 26, 2021 - 11:11 am)sex games for children https://sex4games.com/
2lengthy
(December 30, 2021 - 9:21 pm)1equator
free rulette gay chat
(January 2, 2022 - 12:00 pm)good chat to meet gay bimarried https://bjsgaychatroom.info
gay punk dating
(January 2, 2022 - 5:56 pm)online gay dating site crossword https://gaysugardaddydatingsites.com
viagra at walmart
(January 12, 2022 - 8:41 am)viagra at walmart
viagra at walmart
buy generic viagra
(January 12, 2022 - 11:45 am)buy generic viagra
buy generic viagra
cialis pharmacy india
(January 13, 2022 - 8:34 pm)cialis pharmacy india
cialis pharmacy india
cialis daily generic
(January 14, 2022 - 5:31 am)cialis daily generic
cialis daily generic
cheapest viagra prices
(January 17, 2022 - 6:25 pm)cheapest viagra prices
cheapest viagra prices
azithromycin 250mg tabs
(January 19, 2022 - 4:03 pm)azithromycin 250mg tabs
azithromycin 250mg tabs
can you take cialis and viagra
(January 23, 2022 - 8:41 pm)can you take cialis and viagra
Income Drawdown – Investoo – The London Investor
meloxicam for cats dosage
(January 24, 2022 - 8:10 am)meloxicam for cats dosage
meloxicam for cats dosage
viagra triangle
(January 24, 2022 - 10:01 am)viagra triangle
Income Drawdown – Investoo – The London Investor
how can i get viagra
(January 25, 2022 - 7:24 pm)how can i get viagra
Income Drawdown – Investoo – The London Investor
walmart viagra
(January 27, 2022 - 7:44 am)walmart viagra
Income Drawdown – Investoo – The London Investor
cialis without precription
(January 27, 2022 - 4:19 pm)cialis without precription
Income Drawdown – Investoo – The London Investor
free casino games slots
(January 28, 2022 - 6:56 pm)free slots cleopatra https://2-free-slots.com/
free fun slots no download
(January 28, 2022 - 8:09 pm)slots lounge https://freeonlneslotmachine.com/
lobstr fest 11 slots
(January 28, 2022 - 11:36 pm)big win vegas slots https://candylandslotmachine.com/
sim slots
(January 29, 2022 - 3:36 am)slots winning video 2022 https://pennyslotmachines.org/
computer memory slots
(January 29, 2022 - 6:45 am)free slots to play https://slotmachinesworld.com/
get cialis to work
(January 30, 2022 - 5:08 pm)get cialis to work
Income Drawdown – Investoo – The London Investor
d
(February 3, 2022 - 5:07 pm)best free slots with bonus https://slotmachinesforum.net/
nude slots for free
(February 3, 2022 - 8:06 pm)real casino free slots https://slot-machine-sale.com/
hot shot free slots
(February 4, 2022 - 1:44 am)free slots 4 u https://beat-slot-machines.com/
baba wild slots casino
(February 4, 2022 - 2:34 am)aristocrat free slots https://download-slot-machines.com/
slots machines
(February 4, 2022 - 7:56 am)free slots vegas world https://411slotmachine.com/
las vegas free slots
(February 4, 2022 - 10:50 am)caesar slots free download https://www-slotmachines.com/
play slots
(February 4, 2022 - 2:15 pm)hack online slots https://slotmachinegameinfo.com/
cialis black australia
(February 9, 2022 - 9:39 pm)cialis black australia
cialis black australia
dissertation proposal sample
(February 10, 2022 - 5:00 pm)dissertation editor cost https://buydissertationhelp.com/
spss dissertation help
(February 11, 2022 - 3:45 pm)dissertation help writers https://dissertationwriting-service.com/
apa 7th edition dissertation example
(February 11, 2022 - 7:21 pm)dissertation writing help service https://help-with-dissertations.com/
dissertation writing services near me
(February 11, 2022 - 9:18 pm)what is dissertation writing https://mydissertationwritinghelp.com/
dissertation case study
(February 12, 2022 - 1:56 am)online dissertation writing https://dissertations-writing.org/
monica crowley dissertation
(February 12, 2022 - 6:45 am)need help writing a dissertation https://helpon-doctoral-dissertations.net/
omnicef 300
(February 19, 2022 - 7:14 pm)omnicef 300
omnicef 300
erythromycin frequency
(February 20, 2022 - 2:36 pm)erythromycin frequency
erythromycin frequency
keflex antibiotico
(February 21, 2022 - 2:25 am)keflex antibiotico
keflex antibiotico
augmentin chalazion
(February 21, 2022 - 3:09 am)augmentin chalazion
augmentin chalazion
augmentin size
(March 1, 2022 - 9:41 am)augmentin size
augmentin size
augmentin suspension
(March 1, 2022 - 4:58 pm)augmentin suspension
augmentin suspension
zithromax classified
(March 1, 2022 - 8:12 pm)zithromax classified
zithromax classified
augmentin class
(March 2, 2022 - 12:53 pm)augmentin class
augmentin class
flagyl drip
(March 2, 2022 - 7:28 pm)flagyl drip
flagyl drip
generic augmentin
(March 3, 2022 - 3:46 am)generic augmentin
generic augmentin
celebrex lyme disease
(March 5, 2022 - 8:38 pm)celebrex lyme disease
celebrex lyme disease
Comments are closed.