![]() In most cases, as previously highlighted, you can take up to 25% of your pension as tax-free cash while leaving the rest invested. But you must be aware that returns are never guaranteed. Consider your pension drawdown options, because by investing, you can unlock growth. Pension drawdown products can be a flexible way to use your savings the way you want to. Your pension pot will remain invested until you act, making these the best funds for income drawdown if fluidity of income is your aim. ![]() The difference between a flexi-access drawdown pension and a capped pension drawdown, is that, with a flexi arrangement, you are able to withdraw lump sums from your pension pot beyond your initial 25% tax-free total.īecause a drawdown pension is ‘flexi-access’, it is up to you, as the retiree, to decide how you manage your money with more freedom than a capped drawdown pension plan offers, whether you continue to take regular income or sporadic lump sums. ![]() However, while you’re able to continue benefiting from this scheme if you’ve been retired for some time, this pension drawdown has been unavailable for new retirees since 2015. This limit is worked out using Government Actuary Department (GAD) rates. These allow you to withdraw your initial 25% lump sum, tax free, before limiting, or capping, the income you can continue to take. If you began exploring pension drawdown options prior to April 2015, you may have come across capped pension drawdown products. However, before you consider changing your plan, or entering a new drawdown pension, you should consider the two types: capped and flexi access. This way, you can get those most out of your pension, and maximise your return by capitalising on the best funds for income drawdown. Whether you’ve already withdrawn your lump sum or considering the best drawdown pensions for the near future, it’s important to browse the market and shop around. Any subsequent lump sum withdrawal is subject to income tax, according to standard rates. Instead, your money remains invested, usually in the stock market, which can be risky, as the market can be volatile and fluctuate.Īt 55 years old, you can begin to consider the best funds for income drawdown in retirement, as well as take the first 25% of your pension tax free. A drawdown pension is a way of taking money out as income in retirement, without withdrawing your entire pension pot.
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