Flexi-access drawdown lets you keep your money invested while giving you access to take an income and/or lump sums from your investments when you need to. As the name suggests, it can give you significant flexibility over how you take your pension benefits.
Understand your optionsBack to previous page
How it works
With flexi-access drawdown you keep your money invested, choosing investments that suit your risk appetite. For advice on whether a fund or investment is suitable for you, please speak to a financial adviser. There may be a charge for this.
You can then take an income and or one-off cash payments from your investments to suit your needs and yearly income tax position. This gives you the control to start, stop or vary your income and cash payments.
- Lets you keep paying into a pension as long as you'd like. You may be restricted on the amount you can contribute without incurring tax charges.
- When you first take an income it triggers a reduction in the amount you can pay each year into money purchase pensions without incurring a tax charge (£4,000 for the tax year 2020/21).
- Is a more involved option than an annuity as you need to take an active role in managing your pension.
- Can pay death benefits from any remaining funds after your death.
- Unless it comes with a guarantee, you can't be certain that your money will last to the end of your lifetime.
- Regular income and one off lump sum paid from your flexi-access drawdown account are taxed as income.
- Can be a more complex option - you may want to get financial advice before you apply.
Following from the Pensions Freedom Act in 2015, the FCA have set out new rules to help unadvised customers in drawdown. As part of the retirement outcomes reivew, the FCA have introduced four Investment pathways for providers to offer to help make retirement choices simpler.
Investment Pathways is designed to help make your retirement choices simpler. You'll be able to choose from four, tailor made options and select the type of fund that's best suited to your retirement needs.
Whether you choose to leave your money where it is or begin to take an income, you can review your retirement options at any time and choose to switch funds without penalty.
You can review your options under the drawdown section of your Retiready dashboard or if you're an Aegon & Scottish Equitable Pensions and Bonds customer you can find our forms in our retirement control support section. We've also created a help and support page if you'd like to find out more.
The level of income is not guaranteed. There's a real chance that you may need to reduce your drawdown income in the future, in particular if the performance of your investments is lower than expected, or you live to a greater age than originally anticipated when choosing your initial income level.
Drawdown will reduce the size of your pension fund and the investment growth may not be sufficient to maintain the level of income you wish to draw. If you withdraw money at a rate greater than the growth achieved by your investments, your remaining fund will reduce in value. The level of income you take will need to be reviewed if the fund becomes too small - this is more likely the higher the level of income you take.
The income you receive may be lower than the amount you could receive from an annuity, depending on the performance of your investments.
The rules governing how much income you can take directly from your pension fund may change. This could mean that the income you can take from the investment no longer meets your requirements.
The value of any tax relief will depend on individual circumstances. This information is based on our understanding of current, taxation law and HMRC practice, which may change.
Things you should think about when taking a flexi-access drawdown plan
- When and how you take your pension benefits.
- Think about the amount of tax you’ll have to pay on your regular income or one off lump sum payments.
- Do you have someone that relies on you financially?
Is flexi-access drawdown right for you?
Create an income plan for retirement
Find out which retirement option best suits your circumstances and fits with your goals. Use our interactive tool to view, combine and adjust your options.