What is flexi-access drawdown?
From the age of 55, you can use flexi-access drawdown to take a tax-free cash sum and an income from your pension fund as you need it. Your fund remains invested and is available for the benefit of your loved ones on your death. Unlike an annuity, however, the income is not guaranteed and depends on investment performance.
Flexi-Access Drawdown allows you to:
- Take up to 25% tax-free cash – defer some if you wish
- Take a regular or irregular income of any amount – and change this whenever you wish
- Take an ad hoc cash withdrawal anytime you like, keep your fund invested, with the potential to keep on growing
- Buy an annuity in the future should annuity rates sufficiently improve or you qualify for an enhanced annuity on attractive terms
- Pass on the value of your fund to your loved ones when you die, usually inheritance tax free
Is flexi-access drawdown suitable for you?
Your pension fund remains invested so you need to be:
- Happy to accept investment risk and to accept the possibility of your fund falling in value
- Comfortable taking the risk that if investments don’t perform satisfactorily, they might not be able to sustain the amount of future income you need
If you have any doubts about accepting these risks, then you could consider buying a lifetime annuity to provide you with a guaranteed level of income for life or a fixed term annuity providing an income for a specified term of years.