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. Drawing income will reduce the value of your account. You may need to reduce your drawdown income in the future, in particular if investment performance isn't sufficient, or you live to a greater age than originally anticipated.

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 regularly.

Depending on the performance of your investments, the income you receive may be lower or higher than you could receive from an annuity. You can find out more about annuities here.

The rules governing how much income you can take may change. This could mean income drawdown 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.

Pension Wise, a service from MoneyHelper, is a free and impartial government service offering guidance about your pension options at retirement. If you're aged 50 or over you can book a free appointment to speak with someone at Pension Wise over the phone or face to face. They'll talk you through your options to help you make an informed choice when you access your pension savings.

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.