What is flexi-access drawdown?

Flexi-access drawdown changes your pension into a type of pensions savings account available for anyone over the aged 55 and allows you to take income and keep control of your fund.

In contrast, an annuity provides a lifetime income in exchange for your fund and you cannot change this even if your circumstances change in the future.

With flexi-access drawdown you can take your 25% tax free lump sum and the remainder of the fund sits in a tax efficient pension plan that can grow tax free, even if you are a higher rate tax payer.

For people that continue to work, they will be able to make contributions to the pension and receive tax relief with the option of immediately taking their 25% tax free lump sum. Even if you have no taxable income you can contribute £3,600 each year.

Accessing a smoothed growth fund reduces volatility for a mix of equity and fixed interest assets and gives you more control. The return from these funds is 5% to 6% after fund charges which you can take as income.

Flexi-access drawdown offers tax efficiency, easy access with penalty free income making an attractive alternative to traditional bank or building society savings which often have low upper limits, restrictions on taking income and the loss of interest for early encashment.

There is also the opportunity to leave the fund to a dependant, nominee or successor on death and in some circumstances completely free from tax.


What can you do with the fund

There are four popular strategies with flexi-access drawdown to give you cash or income over time as follows:

	Take full fund - The fund can be taken over two or more years to minimise your tax liability.
	Maximum income - Take enough each year to last your lifetime or until you reach a specific age.
	Similar annuity income - Match the income from a lifetime annuity.
	£Nil regular income - Allow the fund to grow taking cash lump sums when you need it.

By remaining in a pension environment rather than savings, the fund benefits from tax free growth with the option of smoothed return funds offering very low volatility and returns of 5% to 6% per year.


What are the advantages

	Ideal for smaller funds from £30,000 and more.
	Take your tax free lump sum now.
	Easy access to your full fund as income or single lump sums at any time.
	Take your whole fund as a cash sum less tax at your marginal rate.
	Leave the fund in a secure cash fund or select a smoothed growth fund with a 5% to 6% return and low volatility.
	Low cost structures with no extra charges for withdrawals.
	Contribute to the plan and receive tax relief at your marginal rate or £3,600 pa if you have no taxable earnings.
	The fund, in the event of early death, can be transferred to your dependant, nominee or successor.
	You can consider your options at any time, including a lifetime annuity, fixed term plan or any other option available.
	You can move your fund to any other flexi-access drawdown at any time without penalty if you are offered better terms.
	Avoid buying a lifetime annuity now when rates are near an all time low.
	You do not have to give your capital away to an insurance company in exchange for an income.

Source: Sharingpensions.co.uk research. This drawdown chart is for a 60 year old with a fund of £100,000. Combination of fund and income paid of £3,640 pa.

Find out how much you can receive from the highest standard annuity, either complete our quote form or call 020 8816 7501 today.

About Sharing Pensions

Sharingpensions.co.uk was created by its founder Colin Thorburn in 2001 to provide a free pensions and annuity resource to hundreds of thousands of people at retirement making their decision making easier and to select the best options.

Colin Thorburn has nineteen years experience in pensions and annuities, is an individual authorised by the Financial Conduct Authority and business is submitted through Blackstone Moregate Ltd which is authorised and regulated by the FCA (no. 459051).