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Income Drawdown

 

Pension Finder introduces you to Income Drawdown advisors with the appropriate level of technical pension knowledge.

Income Drawdown is technically more demanding and structurally very different from an annuity. We strongly recommend appointing a suitably qualified specialist pensions advisor to guide you through all of the planning issues that we will begin to touch on here.

 

 

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  Income Drawdown - more information

Income Drawdown gives more flexibility by leaving the retirement planning door wide open for more definitive decisions at a later date.

If you are approaching retirement and thinking about income drawdown, then it is vital that you and your advisor take as many factors as possible into account, including the following:

  • Death Benefits
  • Rules and Regulations
  • Alternatives
  • Providers
  • Income Requirements
  • Tax Free Cash
  • Inheritance Tax
  • Age
  • Investment Risk
  • Size of Pension Fun

Income Drawdown is a retirement planning option typically available to a person at normal retirement age (NRA) with a total combined pension fund value of over £100,000.

We are happy to introduce you to a suitable advisor if you complete our form today.

Income Drawdown Reviews and Administration:

The need for advice is very obvious when considering what happens next, after you have decided to initially use Income Drawdown as a financial product that supports your retirement planning.

Firstly, Income Drawdown needs to be reviewed and it is most definitely not a one time planning event that finishes when the transaction is completed. So choosing a supportive and reliable advisor that will be there to guide you through each and every review is vital.

Staying up to date with your chosen funds performance, investment fund values and the potential impact that it may be having on your varying income requirements can be confusing. A quality advisor is there to help you understand the financial impact and address these important technical matters.

Completing paperwork like tax returns and keeping up to date with the Income Drawdown rules and regulations can be stressful. Advisors with strong supportive administrative backup teams can help with every step of the process and are worth their weight in gold.

Your income and therefore your income tax calculations may vary depending on how you use your lump sum and subsequent income options. An advisor with strong links to tax practitioners and accountants will be able to plan and demonstrate the optimal strategy for you.

Take your Income Drawdown enquiry up a level and complete our form today.

Risk & Reward

Income Drawdown allows you to keep your options open for much longer and maintain maximum planning flexibility around income.

Mortality statistics are improving, people are living longer and so more pressure is being placed on their pension funds to provide income for significantly more years in retirement.

Inflation and rises in the cost of living can be problematic after all the cost of heating, lighting and food isn’t likely to start falling anytime soon. Trying to have your investment returns out-pace inflation often causes people to start blue sky thinking and taking on too much risk.

If you are seeking certainty about your income in retirement with minimum fuss then you may find your advisor steering your conversation in the direction of an annuity.

Steer yourself through the more challenging issues with a qualified Income Drawdown specialist, complete our form today.

 

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Income Drawdown / Unsecured Pensions
March 2nd, 2011 | Income Drawdown

Unsecured PensionsIncome drawdown, also known as an unsecured pension, is a riskier though potentially more rewarding alternative to lifetime annuities. Essentially, you are allowed to take money from your pension directly yet the money that remains continues to be invested.

Staying In Charge

Control is the most important element in income drawdown and is its most attractive feature. All responsibility for the security of your pension rests on your shoulders as you can choose the investments. If you make the right investment decisions and have enough self-control to resist the urge to withdraw large amounts, it is likely you will make a profit. Equally however, poor decisions are often heavily punished.

Should you die while your pension is still in income drawdown, the remaining value of the fund can be left to the person(s) of your choosing though they will be hit with a 35% tax charge if it’s a lump sum. Alternatively, you could leave them the value of the pension which could provide a taxable income.

With a contracted out pension, your civil partner or spouse must have a certain level of income provided for them. It does not matter if it comes in the form of annuities or income drawdown. In the event you have neither a spouse or civil partner, the fund can then be passed onto a beneficiary of your choosing.

You are allowed to buy a lifetime annuity with an income drawdown fund at any time. Once you reach the age of 75, income drawdown must be converted into an annuity or else it can be placed in an Alternatively Secured Pension (ASP). The ASP is basically an extension of income drawdown though you enjoy less benefits and the amount that can be withdrawn is also less. Those who have not set up an annuity by the time they reach 75 will automatically find that their pension fund is moved into an ASP.

Income drawdown undoubtedly has many benefits but it should not be seen as some sort of Holy Grail by those looking for flexibility in their pension. The catch is that the value of the fund could well decrease rapidly. In fact, if you are careless when withdrawing money and make some poor investment choices, you could find your fund almost wiped out. This would be a complete disaster because you would then be reliant on the state pension and any retirement plans you had would be destroyed. Therefore, only consider income drawdown if you understand and are prepared for these risks.

Explaining Income Drawdown

The first step is to decide just how much of your Self Invested Pension Plan (SIPP) fund or pension you would like to invest. It is then possible to withdraw up to a quarter of this money in tax-free cash before using the rest as a form of taxable income. As there is no minimum amount for withdrawals, you could theoretically withdraw no money at all. The income that is withdrawn will be subject to PAYE (Pay As You Earn) at source. It is then up to you to decide where your pension money should be invested. As the market is volatile, be sure to regularly check how your investments are performing.

If you haven't found all the answers that you are looking for you can find similar content in the Income Drawdown sections, contact an adviser at the top of the page, or you could try these related posts:

Unsecured Pension
This is another name for Income Drawdown and is an alternative to buying an annuity when you stop work. It will enable the holder to draw income from their investment...
Income Drawdown
This is also referred to as an unsecured pension. Income Drawdown is only available to individuals aged less than 75 and it allows a pension scheme member to continue...
SIPPs: Retirement Options – Unsecured Pension- ASP
Unsecured Pension This is also known as income drawdown and lets you invest money into the pension fund whilst withdrawing the tax-free lump sum and using your fund...
Income Withdrawal
This is similar to Income Drawdown, but it is designed for those aged over 75. Confusingly, this is also known as an unsecured pension. This policy also allows...
Transfer to Income Drawdown
Income drawdown is also known as an unsecured pension. It is far more flexible than annuities because you are allowed withdraw a certain amount of money from your...