Adviser Centre

Income drawdown.

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Income drawdown is an alternative option to buying an annuity.  It allows your client to take an income and/or a tax free cash sum direct from their pension fund, from the age of 55.

The maximum amount of income available is set by HMRC. Your client can take any amount up to this limit, or no income at all. Your client can also change the amount of income they are taking at any time they like.

The maximum amount of tax free cash available is generally 25% of the pension fund that has been designated.

Your client can choose which funds or assets they wish for the income and tax free cash to be taken from. They can also change their investment choice at any time.

Any income taken will be subject to income tax in the same way as income from an annuity.

We offer three types of income drawdown; full, partial and phased.

Full income drawdownThis is where the whole of the pension fund is designated to provide an income and/or a tax free cash sum.
Partial Income drawdownThis is where only part of the pension fund is designated to provide an income and a tax free cash sum. The remaining pension fund can be used for income drawdown at a later date.
Phased income drawdownThis is where your client does not want to take benefits from the whole of their pension fund, but would like to withdraw a specific amount from it each year, through a combination of tax free cash and income.

Each year, the client specifies the amount they want to withdraw in that tax year, gross of tax. We will then designate the appropriate level of funds to pay the selected amount.

Our Portfolio Plus SIPP and Portfolio Plus Pension offer all of these options.

Our Personal Pension Scheme No. 1 only offers full income drawdown.

Each of these pension products is also able to accept transfer payments consisting of pension funds that have been fully designated for income drawdown.

Please see our product literature for more information and details of the charges involved.

The value of investments can fall as well as rise and is not guaranteed.

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