Personal Financial Services
The revised pension legislation from 6th April 2011 offers two types of unsecured pension, which are only available via money purchase pension schemes:
This method operates by allowing you to draw an income directly from the fund without purchasing an annuity. The maximum level of income allowed is set at outset and will be 100% of the prevailing Government Actuary's Department (GAD) rates when you place the fund into drawdown. This maximum income will be reviewed and reset every three years. In the intervening period your fund would remain invested and its value may therefore go down as well as up. If it increases then a higher income level may be available at the next review point. If it decreases then a lower income is likely to be available. This option provides the flexibility for you to amend the income you take each year between £0 and the maximum allowable to fit your circumstances.
Under this method your fund also remains invested however there is no limit on the amount of income that can be drawn from the fund each year so long as you can meet the Minimum Income Requirement (MIR) from other sources. The MIR is set at £20,000 per year and includes state pension benefits; final salary pensions; and level lifetime annuities. In essence an individual needs to be able to demonstrate that they have a guaranteed retirement income of £20,000 per year in order to access Flexible drawdown. The usual tax-free lump sum is allowed, but any other withdrawals taken by the individual will be taxed as income in the tax year they are paid.
This can be suitable if:
For more information, or for advice on which is the best option for you, please contact us or request a call back.
Make an enquiry
