If your unsure on how we could help you, or just looking for a little help, leave your details and one of the team will call you back for a quick chat.
Call us now on 0161 413 7051
If your unsure on how we could help you, or just looking for a little help, leave your details and one of the team will call you back for a quick, informal chat.
Home > Blog > Company News > How does flexible drawdown work? Take your pension money when you need it.
Pension drawdown is the product where you can ‘withdraw money’ from the funds in your pension pot once you reach 55 years old (or potentially younger if you have a life-threatening medical condition and dependent on your pension provider)
As with most defined contribution pensions or SIPPs, 25% of your flexible drawdown pot is tax-free, and the rest will count as income and is therefore subject to income tax. Unlike a Pension Annuity, using drawdown will mean that the remaining pension pot that you have not taken will remain invested. By keeping the funds invested means they may continue to grow and benefit you in the longer term, but on the flip side, if the markets dip, your pension fund could also decrease.
‘Flexible’ pension drawdown or ‘Flexi-access’ drawdown means you can potentially draw as much money as you need from your pension pot. It’s always advisable though to speak with a financial adviser (like our expert advisers) to put a retirement income plan together to help ensure you don’t run out of money in later life.
No governmental rules state that you legally must take professional advice before entering drawdown with a defined contribution pension. There are although legal rules regarding defined benefit pensions, meaning that you must take financial advice if your final-salary pension is worth over £30,000. Furthermore, flexible drawdown is not often available with final-salary pensions, but different pension providers will have their own rules on how and when you can take your pension.
When deciding on how to take income from your personal pension, we would always recommend speaking with an expert on your options.
Simply put, No, there is no limit to taking money out of your pension if you’re 55 years or older. As we mentioned, your initial 25% withdrawal will be free from tax, but the rest will be subject to income tax. When considering taking money from your pension, please always remember that these funds may need to last your entire life and cover any expenses you may have. Speaking with an expert could help you to manage your funds and put a plan together to ensure you don’t run out of money.
Not all pension providers and policies allow you to take money flexibly from your pension. Finding the best flexible income drawdown provider for you can be challenging, but using a pension professional can make things a little easier. By working with you, a professional can find out what are your needs and wants are for your pension, and the search across the market to find you the best provider.
The pension provider you have been investing with over the years, may not offer you the best deal, at the lowest price with the flexibility you require. It’s estimated that drawdown retirees are losing over £780 million* by not shopping around.
When comparing pension providers and drawdown plans, one of the most important things to examine is the fees. Once you’ve identified the criteria you want, fees can make a significant difference in the amount of money you have to enjoy.
Take all of the hard work away, and speak with our advisers who can search the market for you and find the best deal for you.
Unfortunately, yes, pension providers will charge you to keep your money invested and manage your funds. But, the good news is that by shopping around you could reduce those charges, meaning more money for you.
Here are some of the charges you may need to watch out for:
Deciding on how to take your money in retirement is an important decision that could benefit from talking to an experienced professional. Our team are here to offer advice and recommendations, with our no obligation, no upfront fee service. Please call 0161 413 7051 to start the retirement planning process or find out more about drawdown here.
Pension Statistics: The Nation’s Biggest Pension Worries
14 November 2023
5 minute read
10 Retirement Planning Questions To Ask Your Financial Adviser
02 November 2023
5 minute read
Hilltop Financial Planning Recognised As Top 100 UK Financial Advisers By FT Adviser For Second Year In A Row
17 October 2023
5 minute read
We just need to take a few more details to understand what we can help you with and when is convenient for us to call you back. Gives you a chance to pop the kettle on ☕
What would you like our expert advice on?
Is there any advice in particular?
Finally, just pop your details here and we’ll be in touch