Pension Drawdown

Flexi Access Drawdown 

If you’re 55, or approaching 55, and thinking of taking cash or income from one or more personal pensions then here are some things to consider. 

The benefits of a drawdown arrangement 

You can take up to 25% of the total value of your pension arrangements as a lump sum – known as pension commencement lump sum – tax free. The remainder of the fund is taxed as and when you take it.  

Putting your pensions together under one arrangement will raise the profile of your pensions and better enable you to monitor them, invest them – coherently - as one entity, and plan going forward.  

Features of a drawdown plan  

Online values – you can see the daily value of your pension at all times via a secure login 

Transaction trail for record keeping – over time you’ll come to appreciate knowing how much income you’ve taken out and when – and how much cash 

Annual reviews – we get the chance to sit down each year, face to face, with an adviser 

Invested appropriately – the biggest single factor governing the returns you get from your current plans is the asset mix – I.e. whether it is in shares or fixed interes – putting them all in one plan enable us to ensure they’re in a coherent appropriate mix, to suit you 

 Costs of switching to drawdown 

You need to check (1) whether any of your existing plans have any guaranteed annuity rates – these may mean it is worth keeping your plan where it is (2) any exit costs of your existing plan (3) the ongoing costs of your existing plan compared to the costs of a new plan (4)  the cost of setting up a new plan 

A financial plan 

Most important of all, taking your circumstances ( assets, attitude to risk, capacity for loss, health, need for income, ages etc) into account – we'll jointly come up with a plan for the next few years, and beyond – that is tax efficient and makes sense for you and your family. 

Once we have a plan and we have implemented the next most important thing is to monitor it. So we have a face to face meeting each year, or more frequently if necessary.  

We use cash flow planning – that is to say we assume rates of return and also varying income levels, you may wish to draw £20,000 a year until state pension age and then draw £12000 thereafter – we can incorporate changing income needs and update each year in light of changing capital values  

Risk management 

We’ll recommend you invest your funds, history tells us that’s where the best returns have come about. But in finance it is all historic, there’s a risk going forward. 

The longer the term an investment runs the better the chance it has to outperform cash – so we sub divide your funds by term - we’ll break it down by funds needed in 1-2 years 3-10 years and 10 years plus, and invest each element differently – this is one way we manage risk