Under the new pension rules there is no restriction on the level of income that you are able to take, however, you should be mindful that taking a high level of income may result in your fund being depleted and not lasting for the rest of your life. How much income can I take from this plan? Please note that this option can result in you paying higher rate tax.įlexi-access drawdown differs from UFPLS, which is normally only available through your current provider, in that you have the flexibility of taking your tax free lump sum and being able to leave the balance invested, to provide an income and to pass on to your loved ones in the event of your death. Alternatively, you can take a series of lump sums, 25% of the amount paid is tax free, with the balance taxable as pension income. You can normally take 25% as tax free cash, with the balance subject to tax at your marginal rate. Uncrystallised Fund Pension Lump Sum (UFPLS) enables you to take your pot as a cash lump sum. It also offers the potential for your fund to benefit from investment growth, which is not available through the fixed term annuity. At the end of the specified term, a guaranteed maturity amount is paid for you to reinvest in an annuity or another retirement product available at that time or to take as a lump sum, subject to income tax.įlexi-access drawdown is more flexible than a fixed term annuity as you have the ability to vary your income. This option however, offers greater death benefits than a standard conventional or enhanced annuity.Ī fixed term annuity is written under the same Drawdown rules as flexi-access drawdown to provide a regular level of income for a specified time period e.g. However, you need to be satisfied with ongoing investment risk, in that the value of your fund and therefore your income, may go down depending on the performance of the underlying investment. However, once set up, the payment terms cannot be altered, even if your circumstances change.įlexi-access drawdown offers you more flexibility without committing to a life time annuity. So your future annuity payments are known in advance. How does it differ from other options?Ī standard conventional or enhanced annuity provides guaranteed payments for life, no matter how long that is. This option can be useful if you want to keep your options open for the future, especially if you anticipate a change in your circumstances. On death after 75, the lump sum or income is taxed at your beneficiaries' marginal rate. In the event of your death, it also gives you the ability to pass on your fund to your spouse, the next generation or to whoever you want, tax free before age 75. You can take regular income or irregular income from your fund and even postpone your income should you wish. You are able to take 25% as tax free cash, with the balance being treated as taxable income. Any references we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice which can change.įlexi-access drawdown is a form of personal pension that enables you to take an income directly from your pension fund, keeping it invested, without having to buy an annuity, hence you retain control of your pension fund and therefore your investments. This Q&A document should be read in conjunction with the Key Features Document (KFD) relevant to the provider of your flexi-access drawdown, their quotation and any other documentation they refer to. Your questions answered flexi-access drawdown
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