Flexi-access drawdown allows you to take an income directly from your pension pot as and when you need it, leaving the remaining funds invested for growth. You can choose the level and timing of your income, there is no limit other than the total value of your pension pot .

As you move into drawdown, you can take an initial tax-free cash sum of up to 25% (a quarter) of your pot.

You then move the remainder of your pot into funds that match your income and investment objectives as well as your attitude to risk. The funds you are invested in should be periodically reviewed to ensure that your investments continue to be appropriate. There is no minimum income requirement, so you could just take your tax free cash lump sum, and leave the rest untouched.

When you die, your beneficiaries will have the flexibility over how they receive the benefits from your pension pot. For example they could choose to continue with flexi-access drawdown, or use the remaining pot to buy an annuity. 

 

Advantages

 

• More flexible than an annuity, keeping your options open.

• You keep control of your pension pot and the funds it is invested in.

• Flexible death benefits.

• You do not have to take an income but if you do you can change the amount of income you receive to suit you.

• Potential for growth, increasing income and protection from inflation.

 

Disadvantages

 

• Income is not secure. The income and the value of the investments could fall or even run out More complex, needs regular review and may require advice.

• Depending on how long you live, and performance of the funds, the money may be insufficient to support prolonged retirement or death benefits.

• An annuity may offer better long term value for money.

• Potential for poor performance. Reduction in value if markets fall.

• May incur high charges.

 

Whilst the new reforms give individuals far more control with their pensionn savings this is a very complex part of financial planning with many areas ranging from taxes, death or investment strategies to get wrong, so recieving independent financial advice will be hugely valuable to you in this area. 

 

If you would like to arrange an initial meeting with us at your convenience and at our cost to discuss how we may be able to help please contact us.