Flexi Access Drawdown

The money purchase annual allowance (MPAA) will come into effect. This will limit your annual contributions to £10,000 per year, instead of the usual £60,000. 

In the past, some drawdown plans have been limited. Flexi access has no limit – whilst having choice over how the rest of your fund is invested, you can withdraw as much or as little income from your retirement pot as you want.  

All new drawdown products are flexi access. 

There is no maximum or minimum.  

Though it is worth remembering that Flexi Access Drawdown is only available from pension plans which allow drawdown. 

There is no right answer to this. It depends on your personal circumstances.  

Speak with a Chartered Financial Planner about your options.  

The answer depends on your personal circumstances. There are several ways you can do either, as well as many combinations of the two.  

Speak with a Chartered Financial Planner about what is the best way forward for you. 

No. Your State Pension is based on your history of National Insurance contributions.  

The key difference between the two is that an annuity provides a guaranteed lifetime income for your retirement, while a drawdown can see your pension pot (and therefore potential income) increase if investments do well. There are also risks for both options. An annuity has no opportunity for growth, which a drawdown is subject to the normal risks of investing (that your fund will decrease in value if they do not do well).  

Investments can go down as well as up, that is why we prefer time in the market over timing the market.  

There is no simple answer, the best option will differ for everybody, with many using a combination of both. 

If you are in drawdown, you can still make pension contributions and you’ll still receive tax relief on any personal contributions you make, provided you are within the contribution limits – the annual allowance – and are under age 75.  

As with many other pension options, you can normally take 25% of the value of your pension pot as a tax-free lump sum. Further withdrawals are taxable but can be taken whenever you like.  

With a Flexi Access Drawdown, the funds remaining after your 25% tax free lump sum has been withdrawn remains invested wherever it was before – unless you decide to change investments. Where you invest is entirely dependent on what matters most to you, your time horizons, and the level of risk you are comfortable with.  

It’s different for everyone. For instance, some clients don’t take an income after their tax-free lump sum, therefore do not trigger the Money Purchase Allowance, and don’t have to crystalise the whole pension. Others have some crystallised and uncrystallised funds.  

There are countless options – that’s why it is always best to speak with a trusted Chartered Financial Planner.

On death, if there is any fund remaining then it is available to pay benefits to your beneficiaries.  

If you die before age 75, your funds will be given to your beneficiaries as a tax-free lump sum.  

If you die after age 75, your funds will be added to a beneficiary drawdown. This is taxed. 

Advantages of a pension drawdown include (but are not limited to): 

• Access to tax-free cash sum (25% of your pot). 
• Able to vary your income according to your requirements at the time.  
• Control the level of income tax you pay by withdrawing more or less of your pot. 
• Leave the rest of your pot invested to benefit from tax free growth.  
• Choice of death benefits for your beneficiaries.  

Disadvantages of a pension drawdown include (but are not limited to): 

• No guarantee of future investment returns.  
• Potential to trigger the Money Purchase Allowance.  
• Level of income is subject to change.