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Guide to Pension Drawdown

Guide Contents

Pension Drawdown
Release Cash by Pension Drawdown
Pension Drawdown - Frequently Asked Questions
Where to get more help about Pension Drawdown

Pension Drawdown

As the number of people reaching retirement age grows, planning for your own retirement is becoming increasingly important. In past years people commonly used a pension as a way to save for their retirement. Hopefully by which time they have accumulated a nice little nest egg. These savings are then used to buy what is known as an annuity which pays out a regular income based. The value of the income which is paid by the annuity depends primarily upon age at retirement and health amongst other factors.

Once you reach retirement age, all non-state pension schemes have the option of taking up to 25% of the pension fund as a tax free lump sum. However, if you are aged 55 years or over and have a sufficient amount in your pension fund it may be possible to unlock the pension fund early and access this tax free lump sum before you retire. This is commonly known as pension Drawdown, pension release or pension unlocking.

It is important to take independent financial advice on a pension Drawdown, this will ensure it's the best way for you to release the cash.

Maybe it is because of poorly performing investments, but it is becoming increasingly common for people to draw cash out of their pension schemes before they reach the agreed retirement age. If at the age of 55 you find yourself in a position where you are wanting to release a sum of cash, pension Drawdown maybe amongst the best options, depending on the performance of your fund. Other ways of raising a lump sum which should be considered maybe using a credit card, personal loan or a remortgage.

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