Using drawdown for retirement income

A drawdown pension is a way of generating an income whilst your pension fund remains invested. You decide when and how much income you want to drawdown from your investments.  

It is also known as flexi-access drawdown, income drawdown or flexible income.

You may prefer the flexibility of a drawdown pension but you will need to make sure that you understand the pros and cons of choosing this route as it is not without risk.

Care must be taken in deciding whether this product is suitable for you and your personal  circumstances as there are elements of risk that could affect the income available to you.


Drawdown advantages Drawdown disadvantages
Flexibility about when and how much income can be taken. There is an element of risk - investments may fall and your pension fund could decrease, which could mean a significant decrease in future income.
Flexibility in deciding how much of your fund to invest for different growth outcomes. Generally, smaller fund sizes are unlikely to survive a prolonged fall in investment performance.
On your death before age 75, the remaining drawdown fund can be returned to your beneficiaries as a tax free lump sum, or they can continue to receive the income tax-free through drawdown. After 75 it is taxed at your beneficiary’s marginal tax rate. Fees will usually be charged for administration and investment management. The costs associated with these arrangements can be high.
You can still buy an annuity later on in your retirement provided you still have the funds to do so.  


If you are considering this type of product it is important to get some guidance or advice about its suitability for your personal circumstances.

Your financial adviser can provide advice but if you don't currently have one, you can find someone local to you on or

Alternatively every retiree is entitled to some free guidance from the UK Government’s ‘Pension Wise’ service. 


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