Income drawdown is an option that enables people to take a flexible income from their pension fund when they reach 55. With flexi-access drawdown you have total control over how much money you withdraw and how often you take it while your pension remains invested.
The pros of income drawdown
- Your pension stays invested and could increase in value over time
- You have freedom over how much money you take from your pension
- You can control your income tax bill in retirement
The cons of income drawdown
- Your pension can fall in value and your income isn’t guaranteed
- Too many early withdrawals could mean you run out of money in later life
- Not all providers offer flexi-access drawdown as an option
Who is eligible for income drawdown?
Everyone is eligible for income drawdown as long as their pension provider offers it. The pension changes that came into effect in April 2015 scrapped the old capped and flexible drawdown and replaced them with flexi-access drawdown. This means anyone can take a flexible income from their pension with no minimum income requirements.
How much does income drawdown cost?
Most pension providers charge fees for setting up and processing your income drawdown payments. At Bestinvest we have removed our fee for setting up income drawdown and released lower charges for taking income drawdown with the Best SIPP.
Interested in income drawdown?
For more information on income drawdown or to open a Best SIPP please speak to our experts.
The decision to access your pension is an important one and will affect your income and possibly your standard of living for years to come. Therefore we recommend that before any decision is made you receive regulated financial advice or get free guidance from Pension Wise.
SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you then a SIPP might not be right for you. Please contact us for guidance or advice if you are unsure whether a SIPP is right for you.