Drawdown

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When your pension reaches maturity you have a variety of options available to you, including drawdown.

While basic drawdown was introduced in the 1990s it was not until Pension Freedoms were introduced in 2015 that this became a more appealing option and is now a mainstream retirement income solution. 

Flexible Access Drawdown

Previously known as Income Drawdown, Flexible Access Drawdown (FAD) is the most common type of drawdown as it allows the most freedom, giving individuals significant flexibility to take their tax free cash and pension income.

FAD allows individuals to take some or all of their tax free cash with or without an income, allowing the remaining balance to be invested. This ultimate flexibility is very attractive to some individuals but it’s important to understand that if you withdraw the income too quickly you can run out funds. On the flip side, if there are any unused funds these can be passed down to future generations.

Self-Invested Pension Plans

If you decide to proceed with drawdown then your pension is available to re-invest. The typical route for this would be into a Self-Invested Pension Plan (SIPP). 

SIPPs are offered by a wide range of companies ranging from well known insurance companies through to smaller bespoke providers.

When comparing SIPPs it's important to consider functionality, cost and available investment solutions. Typically the more flexibility a plan offers the greater the fees, however there are exceptions. Your adviser will explain this in more detail once we fully understand your requirements.

The value of investments and income from them can go down. You may not get back the original amount invested. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.

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Member of Motorola Pension Scheme