Pension drawdown
Enjoy flexibility and freedom in retirement
Tailor your retirement income to your needs, while keeping your pension invested for potential growth.
Important: Before you apply for drawdown, check you're making the right decision for your circumstances and that you understand all your options. If you’re not sure get free guidance from the government's impartial Pension Wise service, or we can offer personal financial advice. Investments usually outperform cash savings over 5+ years. But values rise and fall, so you could get back lees than you invest. You're responsible for your investment decisions. Tax rules can change, and benefits depend on your circumstances.
Important: Before you apply for drawdown, check you're making the right decision for your circumstances and that you understand all your options. If you’re not sure get free guidance from the government's impartial Pension Wise service, or we can offer personal financial advice. Investments usually outperform cash savings over 5+ years. But values rise and fall, so you could get back lees than you invest. You're responsible for your investment decisions. Tax rules can change, and benefits depend on your circumstances.
What is pension drawdown?
Drawdown allows you to take a flexible income from your pension. You can normally withdraw up to 25% tax free, while keeping the rest invested, and make further taxable withdrawals when you need to.
Flexible withdrawls
Withdraw income whenever you need it. You decide the amount and timing, with no withdrawal fees.
Investment choice
Choose from a wider range of investments than many other pensions, with control over where your money is invested.
Growth potential
Keep your pension invested to potentially grow free from UK tax, beat inflation, and make your money last longer in retirement.
Why choose drawdown with HL?
Join over 83,000 drawdown clients who have taken control of their retirement savings.
Easily switch to a guaranteed annuity income if your needs change.
Enjoy competitive interest rates on any uninvested cash.
Manage your pension on the go with our award-winning app.
Is drawdown the right choice for you?
Drawdown isn’t right for everyone, but it could be the perfect option if you:
Want control of how and when you access your pension.
Prefer to keep your money invested for potential growth.
Are comfortable with investment risks to achieve long-term benefits.
Want flexibility to vary your income as your financial needs change.
Are comfortable managing your withdrawals and understand that income isn’t guaranteed - you could run out of money if you take too much or markets fall.
Get guidance or personal financial advice if you’re not sure.
How to apply for HL pension drawdown
Existing HL SIPP clients
If you already hold an HL Self-Invested Personal Pension (SIPP) you can apply for drawdown directly online or by post. As part of your application, you’ll need to complete some questions and confirm you understand any risks.
Transfer a pension first
If you don't hold your pension with us yet, or you want to move more over before you apply, you'll need to apply to transfer your pension to the HL SIPP first. You can also transfer an existing drawdown pension from another provider.
It's free to transfer to us, but check for loss of benefits, guarantees, and any exit fees before you transfer.
Drawdown investment strategies
Based on your income needs
If you want to take a regular pension income and are happy relying on the income your investments generate, you might look at funds that focus on income. Some managers select investments with strong dividend potential, though income isn’t guaranteed.
If you don't need to take an income yet, a common strategy is to invest for long-term growth. Though not guaranteed, this often means choosing funds that invest across a mix of companies, including higher-risk smaller firms with growth potential.
If you’re planning to take a fixed income and sell investments each time to fund it, it’s important to be aware of how market falls could impact your plan. Some managers use defensive strategies to help minimise this risk, but it can’t be removed entirely.
If you’re not sure how to invest your pension, drawdown pathways are designed to help. They offer four ready-made investment options based on what you say you plan to do with your money over the next five years. While they are a regulatory requirement, they can be a useful starting point if you’d rather not choose your own individual funds.
Free to set up.
Low running costs.
0.45%
Drawdown is free to set up. Our standard account charge is no more than 0.45%. It’s free to hold cash and to buy and sell funds. Dealing charges apply to shares and other investment charges may still apply.
Award-winning service
Over 200 awards, including 'Best Investment App' and 'Best for Customer Service' for 2025.
Over 40 years' experience
We’ve been helping people to save and invest for a better future since 1981.
Ready to help
Our UK-based team is available six days a week to answer calls and provide ongoing help and support.
Get advice on your retirement plans
Not sure if drawdown is right for you, or unsure where to invest? Our financial advisers are here to help.
They’ll offer expert tailored advice on:
When and how to take your pension
Aligning your investments with your personal goals and income needs
Planning for later life and understanding inheritance tax implications
For impartial guidance, you could also consider Pension Wise, a free government service for people aged 50 or over with a UK personal or workplace pension. They provide information on different pension types, how to access your funds and the tax implications of each option.
FAQs
Here you'll find answers to the most frequently asked questions.
Tax rules can change, and benefits depend on your circumstances.
Usually not, because most drawdown pensions are held in trust, so they don’t form part of your estate and aren’t subject to inheritance tax. You should tell your provider who you’d like to inherit your pension benefits, and make sure you keep these nominations up to date.
If you die before age 75, your drawdown pension can be passed on tax-free to your nominated beneficiary.
If you die after age 75, the pension’s value will be taxed at your beneficiary’s marginal income tax rate.
From 2027, some pensions may be subject to inheritance tax if your estate exceeds the threshold.
Tax rules can change, and the benefits will depend on your own circumstances.
Phased drawdown lets you move your pension into drawdown in stages, rather than all at once.
Each time you move a portion, you can take up to 25% of that as a tax-free lump sum.
You choose how much taxable income to take from the rest and when.
The rest stays invested as you choose, and can rise and fall in value.
Income is flexible but not guaranteed. Taking too much too soon or poor investment performance can reduce your income over time.
Tax rules can change, and the benefits will depend on your own circumstances.
You can't pay directly into a drawdown pension, but you can still contribute to the HL Self-Invested Personal Pension (SIPP).
You'll still get tax relief on your personal contributions, as long as you're under 75 and within limits.
New contributions will be eligible for tax-free cash withdrawal when you come to access them later
The usual annual contribution limit is £60,000. But once you start taking a taxable income from drawdown your contributions to money purchase pensions (like the HL SIPP) will be limited to £10,000 a year. Taking tax-free cash alone does not trigger this limit.
Yes, you can transfer your drawdown pension to HL.
To start, call the experts on our Helpdesk, or request a drawdown transfer pack.
Before transferring check for exit fees and any loss of benefits or guarantees.
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