![]() Thereafter, all income you draw from the fund will be taxed as income at your highest marginal rate. You’re entitled to take up to 25% as a tax-free cash lump sum from your pension at this point. When you decide to retire, you move your pension to drawdown where it remains invested. ![]() The earliest you can access your pension is 55 with most defined contribution schemes (unless you have an earlier protected retirement age or are seriously ill). Referring to the fact that with drawdown your pension pot stays invested and you live off the income those investments generate, as well as potentially taking out ad hoc lump sums as required. Those in capped drawdown could choose to remain in capped drawdown or move to flexi-access drawdown. Your other option was capped drawdown if you had a smaller fund, which limited how much you could take from your fund to mitigate the risk of it running out.Īfter the 2015 pension freedoms, all flexible drawdown plans were automatically converted to flexi-access drawdown plans, which carry far fewer limitations on the income you can draw down from your pension. Prior to the April 2015 pension freedoms, flexible drawdown was one of two drawdown options available to you if you had an income and a pension pot over a fixed sum. There are several names for pension drawdown: ![]() You shift your pension pot to drawdown, where it’s reinvested in funds designed to provide you with an income stream to live off in your later years. Pension drawdown is a way of flexibly accessing a defined contribution pension at retirement. ![]()
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