Guide to Flexible Drawdown
Flexible drawdown is one kind of income drawdown which allows retirees to draw their income instead of buying an annuity. If you can prove you have what is classed as a lifetime income of above £20,000 per year then you can take as much as is permitted from your drawdown plan. There are also several other requirements that you need to make when opting for Flexible Drawdown…
- You must declare to your pension provider that you adhere to the Flexible Drawdown rules
- You make no further payments into any other DC pension schemes
- You are not making payments in any other Defined Benefits scheme.
As with other forms of drawdown tax will be applied at 55% to any lump sum death benefit paid out. This has increased from the previous level of 35%.
Your drawdown fund will also be exempt from IHT.
FAQ’s
- Can I switch from income drawdown to flexible drawdown?
If you can meet the criteria and your pension provider will permit it then the answer is yes.
- Can my partner/spouse/dependent choose flexible drawdown?
Yes
- What is the taxation level on this type of drawdown?
The same as with any pensionable income it will be subject to the appropriate level of tax
- What is counted as lifetime guaranteed income?
This can include anything from state pensions, final salary pension schemes as well as existing lifetime annuities. Income that is not
guaranteed e/g second home rental income cannot be counted.
Further Reading
Scottish Widdows
