Income Drawdown / Alternatively Secured Pension

Income Drawdown is the facility which enables you to continue to keep your retirement savings invested, and take an income each year rather than buy an annuity. This facility can only be continued to age 75, at which time an annuity has to be bought, or the money must be transferred into an Alternatively Secured Pension (ASP).

The income that can be taken from a drawdown arrangement can be varied each year between a minimum and a maximum. The minimum is £0 and the maximum is 120% of a pension calculated according to tables produced by the Government Actuaries Department (GAD). These tables are based on the amount your fund would buy as an annuity based on your life only and with no allowance for any future increase. The maximum amount needs to be recalculated every 5 years.

A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

The value of your investment and income from it is not guaranteed it can go down as well as up due to fluctuations in investment markets, and you may not get back the full amount invested.

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor.

High income withdrawals may not be sustainable during the deferral period.

Taking withdrawals may erode the capital value of the fund, especially if investment returns are poor and a high level of income is being taken. This could result in a lower income when the annuity is eventually purchased.

Annuity rates may be at a worse level when annuity purchase takes place.

The investment returns may be less than those shown in illustrations.