Income Withdrawal
Income withdrawal, also known as income drawdown or pension fund withdrawal is an option that allows you to take a taxable income directly from the pension fund, without buying an annuity.
The plus points
· This would suit people entering retirement when annuity rates are especially low. Your fund remains invested and you take money directly out of the fund, using it as income.
· There is no minimum amount, which makes income withdrawal reasonably flexible. If you don’t need the income, you can stop withdrawing it at any time.
The pitfalls
· The risk is that your income could be much lower in later years than it otherwise would have been. Success depends on strong investment growth and interest rates not moving in the wrong direction and there are limits to how much income you take in this way.
If you’re unsure whether income withdrawal is right for you, call us for advice.
Short-term annuities
Phased retirement