Pension drawdown provides you with flexible choices regarding your pension. Once you reach 55 you may now withdraw money as you wish, from the sum you have saved into your pension. You can choose to take up to 25% of your pension pot as a tax – free lump sum. You then move the rest into one or more funds that allow you to take an income (which is subject to tax) at times to suit you. Most people use it to take a regular income. The income you receive may be adjusted periodically depending on the performance of your investments.
A drawdown pension will let you use your pension pot to provide you with a regular retirement income by reinvesting it in funds either specifically designed and managed for this purpose or specifically selected for income.
The income you get will depend on the fund’s performance. It isn’t guaranteed income for life; you will only be able to take an income so long as you have a pension pot so it is vital that you understand how much you need to live on and the likely period over which you draw income. Drawdown pensions offer very flexible facilities but do not have the certainty associated with buying an annuity.
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