What’s a drawdown pension?

A drawdown pension lets you keep your money invested and take a regular income or a lump sum when you need to. The income you’ll get will vary depending on the fund’s performance. 

The level of income isn’t 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 an older age than you 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 higher rate than your investment grows by, your remaining pension 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. You can find out more about annuities here.

The rules governing how much income, and when, 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.

If you’re unsure of your options, you should speak to a financial adviser. If you don't have a financial adviser, you can visit MoneyHelper to find the right one for you. There may be a charge for this.

You can also review the different ways you can take your pension benefits using our Retirement Income Planner. 

The value of an investment can fall as well as rise and isn't guaranteed. The value of your pension pot when you come to take benefits may be less than has been paid in.