Pension Drawdown

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Learn to use your pension pot flexibly

Use your pot flexibly to take income and tax-free lump sums to suit your lifestyle and wellbeing.

If you’re getting close to retirement and looking for a way to dip into your pension, drawdown might be a good option to consider.

Pension drawdown is a way of using the money in your pension pot to provide you with regular retirement income by reinvesting it in funds designed and managed for this purpose. The income you receive depends on the fund’s performance and it isn’t guaranteed for life.

You have to be aged 55 (57 from 2028) or over and have a defined contribution pension to access your money in this way.

Pension drawdown

How does pension drawdown work

You would choose to take up to 25% of your pension as a tax-free lump sum. The reminder of your pension would then be moved into a Flexible Income Product that allows you to take a taxable income when it suits you best.

There are two types of drawdown product:

  • Flexi-access drawdown – this is when there is no limit on how much income you can choose to take from your funds. This option was introduced from April 2015.
  • Capped drawdown – this has limits on the income you can take out and was only available before 6 April 2015.
  • Flexible drawdown – this is when you are allowed to take as much money as you want each year. However to be eligible for this option, you need to be receiving pension income of at least £12,000 a year from other sources.
pension drawdown 2

Pension drawdown may be right for you if:

  • You want your money to continue to be invested
  • You want flexibility to access the money when you want
  • You want to take out different amounts each year
  • You want to manage your annual tax liability

With the pension drawdown option your money stays invested (usually in the stock market) so there is a risk your fund may fall in value. However, equally there is the chance that your investment growth will provide higher returns and see you pension pot increase in value.

Pension drawdown is one of many options available to you when taking your pension. We are able to provide you with unbiased advice about the options available to you and the best one suited to your circumstances.

RFS blog - retirement in your 30s

For more information or to discuss the pension drawdown options available to you and any tax implications, please get in touch.


  • For funds that remain invested can go down as well as up which would have an impact on the level of the pension benefits available.
  • The levels of income provided may not be sustainable, so in other words your pension fund may run out.
  • The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

We are able to provide you with unbiased advice about the options available to you and the best one suited to your circumstances.

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