Pension DrawdownApollo Pension & Investment Advisers | Medway, Kent
Types of drawdown
Flexible Access Drawdown
You can withdraw the tax free lump sum available and delay taking any income until a time that suits you. If you take any income above the permitted tax free limit (usually 25%) it will be taxed as income in the year you receive it.
Your remaining fund value is invested in a range of funds which are tailored to your individual investment profile.
Your pension fund is invested and you draw lump sums or income from the fund as and when you wish.
Uncrystallised Funds Pension Lump Sums
Provides you with the facility of accessing your pension but without the need to convert your plan to full Income Drawdown. Each payment made to you is 25% tax free and 75% taxable as income at your marginal rate of income tax.
With drawdown your remaining pension fund is invested in a range of funds based on your perceived investment profile and overall attitude to risk. The biggest risk to drawdown is that if you are looking to take a set level of income per year you may exhaust your pension fund if the fund performance does not exceed the level of withdrawals.
This could result in you having to reduce your income levels in later life. It is therefore vital that we discuss your current attitude to risk and ensure that any income is sustainable both now and in the future to avoid capital depreciation.
If you die before spending the entire fund you can leave your remainder pension to your chosen beneficiaries. If you are under age 75 your beneficiaries receive a tax free lump sum or income. If you are over 75 then income can be paid to beneficiaries at their marginal rate or a lump sum which would currently be taxed at 45%.
Once you begin drawdown you limit the amount you can contribute to pensions in the future.
You can combine pension drawdown with annuity to provide some dependable income with a top up from drawdown for discretionary spending. For some fortunate people they have no need for additional income from a pension pot and would prefer to consider it a contingency fund, maybe to cover possible cost of care in later life. Others enjoy the idea of passing the pot to the next generation or the grandchildren.
There are many options and much to consider – we have a lot offer in helping you put together the right plan. Click here to contact us.