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Flexible Income

Flexible Income Option

Working patterns have changed and people often continue to work after their retirement date, perhaps on a part-time basis. Pensions have changed to reflect this and the Money Purchase Section provides a flexible drawdown option to all members.

Unlike a secure income, your funds remain invested and you simply draw an income directly from those funds as and when you need it. Your income is not guaranteed for the rest of your life. By leaving your funds invested for longer, it may improve your overall income in retirement, but remember the value of your fund can go down as well as up.

You can choose to have an income every month or every year. Tax is payable on the income you receive at your normal marginal rate after you have taken all your tax free lump sum. You can either take your whole tax free lump sum up front or take part of each payment tax free.

Once you have started drawing down an income, you will be subject to the restrictions on future contributions to money purchase arrangements of £4,000 per year.

Things to think about

How important is it to you to have a guaranteed level of income. If it is very important, then flexible drawdown may not be right for you.

How you will invest your fund during your retirement. You may find it helpful to think about risk as how much the value of your account fluctuates, or goes down, when investment markets are difficult. Go to our investment pages for more help on choosing the right investment option for you.

  • How much income you need each year.
  • Whether you need income every year.
  • Whether you have other sources of income which are guaranteed.
  • The risk of your fund running out before you die.

Drawing down an income isn’t right for everyone particularly if certainty over your retirement income is important to you.

It is a flexible way of accessing your benefits which allows your funds to continue to be invested.

We strongly recommend that you use the Pension Wise service provided by the Government and take independent financial advice where appropriate.

The information on this page is provided in good faith but is not legal or financial advice or binding on the Trustee. The trust deed and rules will override in the event of any inconsistency.

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