Pension Fund Withdrawal

Pension fund withdrawal (also known as Income drawdown) is an important retirement option worth considering, particularly for individuals who have pension capital of at least £100,000.

Pension Fund Withdrawal plans were introduced following changes to Pension law in 1995. The changes removed the previous requirement to purchase an annuity at retirement. Pension Fund Withdrawal allows an income to be taken directly from the pension fund itself.

Pension Fund Withdrawal enhances the flexibility in that annuity purchase can be deferred until a time when it may be more suitable. Most of the major insurance companies now offer ‘Income Drawdown’ plans. These plans still allow up to 25% of the retirement fund to be taken as Tax Free Cash.

Income levels are determined by reference to annuity tables produced by the governments’ actuarial department. The maximum income allowable is 150% of the highest level of income determined by the annuity tables, the minimum income which can be taken is nil. These limits allow further flexibility and so perhaps enable full retirement from a working life to be gradually phased in. These plans are categorised as ‘unsecured’ pension plans, eventually an annuity will need to be purchased, usually by the age of 75, although there is now a further option for individuals reaching the age of 75 years to consider – the purchase of an ‘Alternatively secured pension’ plan.  

Pension Fund Withdrawal plans are relatively complex and are not suitable for everyone, but they can for some individuals offer a flexible approach to retirement. Careful consideration must be given to an individuals personal circumstances, including the value of their existing pension/s. We strongly recommend advice be sought if you are considering this option.


For alternative retirement options advice we act as introducers only.

Pension simplification Personal Pensions Stakeholder Company Schemes Annuities Phased Retirement Income drawdown Alternatively Secured Pensions

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Director: Brian Marks

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