Hargreaves Lansdown

What is flexible drawdown?

Flexible drawdown

Flexibility to access your pension how YOU want

Get your flexible drawdown illustration today.

Please contact our pensions helpdesk on
0117 980 9940 who will arrange this for you

Flexible drawdown is a way of accessing your pension savings flexibly. It allows you to draw out as much as you like. You can even take the whole lot as a lump sum, if you wish. The first 25% of the pension fund is usually tax-free, and the rest is taxed as income, at your highest marginal rate.

Currently, there are set criteria on who can qualify for flexible drawdown. However from April New Drawdown will replace flexible drawdown and will be open to anyone over the age of 55 with a private pension. Anyone who is in flexible drawdown before 6 April 2015 will automatically convert to New Drawdown on 6 April.

Under flexible drawdown, there are no income limits at all and you can draw as much income as you like when you like. Important: the more you withdraw in the early years, the less you will have available to use to provide income in the future, meaning there is more danger of you running out of money. You continue to choose where your pension is invested so your fund and the income you take will rise and fall with the market.

Flexible drawdown enables investors to withdraw as much money as they like, when they like, from their pension. Tom McPhail, Head of Pensions Research, explains the risks and benefits of flexible drawdown and how you qualify.

How do you qualify for flexible drawdown now?

The following conditions apply to those wishing to go into flexible drawdown now. These set criteria will be removed entirely from April 2015.

If you would like to request an existing flexible drawdown information and application pack, including a personal illustration, please contact our pensions helpdesk on 0117 980 9940 who will arrange this for you.

  • You must already have a secure pension income of at least £12,000 a year in place. This can include your state pension, a pension annuity or a company pension. Investment income and money from income drawdown don't count. Pension pots not needed to provide the £12,000 could be taken as flexible drawdown. Remember - pensions can be split, with part used to buy an annuity to secure the necessary income and the remainder taken as flexible drawdown. You must receive at least £12,000 of pension income in the tax year you enter flexible drawdown.
  • Flexible drawdown can only be taken once you have finished saving into pensions. If pension contributions have been made to any pension in the same tax year or if you are still an active member of a final salary scheme, it isn't possible to start flexible drawdown. Once in flexible drawdown it effectively isn't possible to make further pension contributions this year.

Compare the different drawdown options

Financial advice

Income drawdown in the Vantage SIPP is offered without advice as standard. Drawdown is a more complex option, and if you are at all uncertain about its suitability for you, we strongly recommend you seek financial advice.

Our advisory team would be happy to help you, for more information about their services please contact them on 0117 317 1690 or visit the advisory services section of our website.

Compare New Drawdown with existing drawdown

What you do with your pension is an important decision. Therefore, we strongly recommend that you fully understand your options. We offer a range of information to help you and independent financial advice if you are still unsure. Alternatively, Pension Wise, the Government’s new pension guidance service, is due to launch shortly providing a free impartial service to help you understand your options at retirement. You will be able to access the service online, over the telephone and face to face. Further details are now available at www.gov.uk/pensionwise.

Important information

Please note income drawdown is a more complex option, if you are at all uncertain about its suitability for your circumstances we strongly suggest you seek advice. Your income is not secure. You control and must review where your pension is invested, and how much income you draw. Poor investment performance and excessive income withdrawals can deplete the fund leaving you short of income. From April 2015, new rules and restrictions on future pension contributions apply to investors in income drawdown: you should check how this affects you before making any decisions.

Download a free pension changes factsheet now

Have a question about income drawdown?

If you have a question or would like more information call one of our specialists on:

0117 980 9940

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Client case study

Income Drawdown case study - Mr Hones

Mr Hones from Chester decided to take income drawdown in the Vantage SIPP so he could self manage all his pensions in one place.

Read his story

Client case study: Mr Hones, Chester

Mr Hones, Hargreaves Lansdown Income Drawdown client

I chose the Vantage SIPP because I wanted to put all my pensions in one place and self manage my funds. This would give me the opportunity to improve on the near zero performance that some of my with profit funds with other providers had returned. I then took income drawdown to get access to my tax free lump sum, which I used to buy a new motorbike among other things. It has allowed me to go part time at age 55 and I can now reconsider my options.

I don’t intend to give up work completely so I want the flexibility that income drawdown gives. I will either not draw an income or draw it alongside income from part time work. In my circumstances and at my age I am very pleased at how flexible pensions have become.

The transfer process was very quick and efficient from your side, however I was appalled with the lack of transparency with my old pensions and with the error which one provider made. I just wonder how many people are affected by the inefficiencies of these companies. However you were fantastic and your charges for moving into drawdown were minimal.

With the SIPP being online I now have everything at my finger tips. I can monitor the value of the pension funds and I tend to check it on a weekly basis. I had online access with one of my previous providers but it was very limited.

Income drawdown in the Vantage SIPP has helped me to semi retire and re-evaluate my career options.