Flexible Drawdown

Flexible Drawdown is available for those who meet the Minimum Income Requirement (MIR).

There is no limit on the amount of income that may be drawn each year – you can take your entire fund out in one go if you really wish.

The usual tax-free lump sum is allowed at any age, but any other withdrawals will be taxed as income under the PAYE system in the tax year you receive the withdrawal.

Under Flexible Drawdown, you must:

• meet the MIR and
• cease all pension provision.

To meet the MIR, you must have a secure pension income in payment of at least £20,000 (either in your own right or as a dependant) in the tax year you opt for Flexible Drawdown. This income can come from a combination of:-

• State pensions;
• Lifetime annuities (including with-profits or unit-linked annuities) under registered pension schemes;
• Scheme pensions from registered pension schemes, and
  secure pensions from overseas pension schemes.

Investment income, Income Drawdown pensions and pension income from other sources (such as non-registered pension schemes or purchased life annuities), do not count towards the MIR.

The Treasury will review the level of the MIR at least every five years, but you only need to pass the test when you opt for Flexible Drawdown. You will not be tested again if the MIR increases.

If pension provision restarts in future (whether funded by you, your employer or a third party), you will be fully subject to the annual allowance tax charge.

The value of this type of investment, together with any income, may fall as well as rise and does not take into account the effects of inflation. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause your investment and the income from it to go up and down. 

To see if you qualify for Flexible Drawdown please contact us.