Unlike a traditional pension annuity the capital from an income drawdown plan is not used to purchase a guaranteed income. Instead the pension fund remains invested in a range of assets, and a variable income is taken directly from the pension fund. This is known as income withdrawal or income drawdown.

Avoid purchasing an annuity Assets remain invested for potential growth Enhanced lump sum death benefits

Our income drawdown service
Our income drawdown service incorporates a full research and recommendation process. This means we ensure you are aware of and understand the associated risks of income drawdown, produce a suitable investment portfolio linked to your risk profile and make a recommendation for a suitable income drawdown plan. Request a quote

Investment risk
Income drawdown avoids purchasing an annuity until as late as age 75 by leaving your pension fund invested in a range of assets. As the value of your pension fund can go down as well as up and future annuity rates could be lower than those available today, income drawdown is regarded as a higher risk to purchasing a traditional pension annuity.

An explanation of the different assets available and the risk associated with each asset and asset class can be found in our investment pages. Online past performance data and detailed fund fact sheets for all UK qualifying stocks & shares, unit trusts, and investment trusts together with all life and pension funds can be obtained from our investment performance pages.

Income limits
The government actuary department limit the income that can be taken from income drawdown plans. Income must be taken between the maximum and minimum limits set. The actual income you take, together with your age, health and choice of underlying investments will affect the risk associated with income drawdown.

Critical yield
The risk associated with income drawdown can be assessed by a formula known as critical yield. In simple terms the critical yield shows how much your pension fund has to grow by each year in order to provide both the income you wish to take from your plan each year and finally buy this income at you 75th birthday by way of a traditional pension annuity. In effect, the lower the critical yield, the lower the risk.

Death benefits
On your death before aged 75 the value of your pension fund, less a tax charge, can be passed to your beneficiaries. This provides greater value than a traditional pension annuity that does not allow you to pass the capital value of your fund to your beneficiaries on death.

Tax free cash
An income drawdown plan allows you to withdraw all of the tax free cash available from your pension plan and leave the remainder of your pension fund invested. This facility is unique to income drawdown and can be beneficial if you do not wish to sell the underlying assets held in your pension fund or self invested personal pension plan.

Phased retirement
A phased retirement plan allows you to ‘phase in’ the income you need over a number of years using a mixture of tax free cash and traditional pension annuities. Phased retirement effectively divides your overall pension plan into 1000 or more segments and treats each segment as an individual pension plan. This allows you to convert one or more segments each year into a pension annuity to provide the income required and leave the remaining segments fully invested. Phased retirement can be combined with income drawdown to provide a totaly flexible retirement income. More information on phased retirement is available in our glossary of terms.

Alternative options
A traditional pension annuity provides the security of a guaranteed lifetime income and removes the investment risk associated with income drawdown and phased retirement plans.

A with profit annuity offers a slightly different alternative to both a traditional pension annuity and income drawdown plans.

You should also review our impaired life annuity page to check if you qualify for an impaired or enhanced pension annuity.

To request a quote
Complete our online income drawdown quote form or call one of our specialist pension advisers to request your free income drawdown quote. As an internet based firm of independent financial advisers we provide advice over the telephone, via email and through the post. Dealing with you in this way allows us to discount our commission to reduce the charges on all income drawdown plans we recommend.

Help & advice
There are many different options to consider when choosing an appropriate income drawdown plan and it makes sense to take advice from a qualified pension specialist who is independent and can offer you products and services from the whole of the market place. Please call one of our independent advisers or contact us to discuss the different options available to you and to request a quote for your income drawdown plan.