Why consider income drawdown?
A flexible alternative if you don't need a secure income
Income drawdown is the main alternative to a secure annuity income. It is more flexible than an annuity but is also more complex and higher risk.
Instead of exchanging your pension pot for the secure lifetime income of an annuity, income drawdown allows you to draw a variable income directly from your pension pot. You choose where to invest and your income will rise and fall depending on your investment performance. There are also greater options for passing funds on when
You have the option of going into income drawdown now, and from next April take advantage of new flexible access drawdown rules (also known as flexi access drawdown) allowing you to take whatever income you wish from your pension.
The sheer amount of control you retain in income drawdown may be an attraction for some investors, but it can also be a drawback. If you take too much income, if stock markets don't go the way you want, or if you live longer than you were expecting, your retirement income could dwindle or even run out. For this reason we believe having at least some secure annuity income will be the best option for most people.
Have you thought about a mix and match approach? Some clients choose a secure annuity to cover their essential living costs and invest the remainder in income drawdown to benefit from the flexibility.
Mr Lloyd, Lanarkshire
Mr Gray, Derbyshire
Mr Roberts, London
Mr Malin, West Sussex
Mr Smith, Surrey
Dr Helevuo, Oxfordshire
Mr Mathews, Liverpool