Income drawdown allows you to draw an income without the need to buy an annuity from your pension fund, subject to HMRC limits. You cannot normally do this before age 50 (age 55 from 6 April 2010).
You can retain control of your investments and flexibility over the timing and amount of income you take. From 6 April 2006 income drawdown (for individuals under age 75) is referred to as Unsecured Pension (USP).
The income drawn down is funded from the amount you wish to use to provide USP after any tax free pension commencement lump sum (PCLS) has been taken. Prior to age 75, you can normally take up to 25% of your pension fund as a PCLS.
USP can also be taken in phases where only part of the fund is used to provide PCLS and income: the balance will continue to accumulate to provide future benefits.
The maximum amount of income you can draw is restricted by HMRC to 120% of the Government Actuary’s Department (GAD) rate. The GAD rate is broadly equivalent to the level of annuity you could have bought with your USP fund. These limits will be reviewed every five years until your 75th birthday. Any remaining USP fund at age 75 will be converted to provide income drawdown in the form of an Alternatively Secured Pension (ASP).
The amount of income can be varied to suit your changing lifestyle.
Below outlines the changes in the ruling for taking income:
Who to contact if you have a query
Share dealing is administered by Hoodless Brennan as Account Manager and any additional pension investment outside equity dealing or administration for the pension is the responsibility of Capita PPML as Plan Administrator.
Hoodless Brennan Contact Details:
Telephone Execution Only SIPP Accounts: (020) 7538 1166
On-Line Trading SIPP Accounts (020) 7510 8649
E-mail: SIPP@hoodlessbrennan.com
Capita SIP Services Contact Details:
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