Phased Retirement, Income Drawdown Policy

Income Drawdown is the name given to the facility to continue to keep your retirement savings invested and take an income each year rather than buy an annuity.

There are two kinds of income withdrawal these being capped drawdown and flexible drawdown. In both cases, any income you take is taxed in the same way as all other pension income.

Capped Drawdown

Capped drawdown is the more common type of the two types of income drawdown.
There is:

  • an upper limit on the income you can take.
  • a requirement to review the upper limit every three years.
  • no minimum level of income you must take, so your fund can remain invested for as long as you like without drawing any income at all.

Flexible Drawdown

Under flexible drawdown, there are no limits on the income you can draw, but you must be able to show you are already receiving other pension income of at least £20,000 a year.

This amount applies to 2013-14 and may change in the future.

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