What is Flexi-Access Drawdown?
You can choose to take up to 25% of your pension pot as a pension commencement lump sum (PCLS). You then move the rest into one or more funds that allow you to take a regular taxable income, ad-hoc taxable payments or no income, whichever suits you.
You choose funds to invest in that match your income objectives and attitude to risk and set the income you want. The income you receive may be adjusted periodically depending on the performance of your investments. Once you’ve taken your PCLS you can start taking the income right away or wait until a later date.
You can also move your pension pot gradually into income drawdown. You can take up to 25% of each amount you move from your pot tax-free and leave the rest in drawdown.
Flexi-Access Drawdown gives you the freedom to take income from your pension savings without a cap or limit. This could be all at once, ad-hoc amounts, or as regular withdrawals. However you take your income it will be subject to income tax in the same way as any other income.
To help provide more certainty, you can at any time use all or part of the funds in your income drawdown to buy an annuity or other type of retirement income product that may offer guarantees about growth and/or income. What’s available in the market will vary at any given time so you’ll need to discuss your options with a financial adviser.
If you are aged under 75, you will be able to pay up to £10,000 a year into money purchase pensions, taking into account any other pension contributions, either you are your employer are currently making.