Primary Advantages Of Pension Drawdown

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Pension drawdown is also known by the name income drawdown. It’s a kind of income withdrawal in which you withdraw a part of your pension amount and the residual amount remained invested so that it could increase with time. Pension drawdown is a very good alternative to purchasing an annuity. You may take out up to 25% of your total pension fund with income drawdown, and this amount is absolutely tax free.
Pension drawdown is deemed most suitable for individuals with larger funds or multiple sources of retirement income. This is so because there is always an element of risk involved in income drawdown; that’s why it is also sometimes called unsecured pension. But, the benefits provided by income drawdown outgrow the risk. Therefore, regardless of the element of risk involved in pension drawdown, a large number of people willingly opt for this investment option. Some primary advantages of pension drawdown are mentioned under:
• Unlike the majority of retirement schemes, in income drawdown the nominee or dependent receives the entire residual amount in the pension pot.
• Pension drawdown keeps open the ...
... option of purchasing annuity for you; so you may purchase annuity when the rates are favorable.
• As said earlier, on transferring your fund to income drawdown plan, you become entitled for a withdrawal of 25% tax exempted amount from your pension pot. Later you can withdraw the income from your invested fund up to a maximum limit set by the Government Actuaries Department (GAD).
• Income drawdown provides you with increased control over your retirement income; it allows you to determine when and in what manner would you receive your retirement amount.
• Your funds remain invested with pension drawdown, providing you the option to grow it further when you don’t require income from annuity.
• You may get funds for an early retirement; these funds can be used to invest in any future venture and they are also tax-free.
• The funds provided by the income drawdown option provide a good way to have more money in your pocket to meet future contingencies or unforeseen expenses.

One thing is important to be taken into consideration regarding pension drawdown that it is available until the age of 75 years only; after this age the drawdown scheme is generally terminated and the residual or remaining funds are transferred to Alternative Secured Pension (ASP).
For more information regarding income drawdown or pension drawdown, along with other associated topics like QROPS, Phased Retirement, Alternative Secured Pension (ASP), etc.

You may get further important information about pension drawdown, along with QROPS providers, QROPS and HMRC QROPS.