Income drawdown (unsecured pension)

Income drawdown (or unsecured pension or USP as we should now officially call it), is designed for those with larger retirement funds who are prepared to take a risk with their pension fund (and, therefore, a risk with their pension income) in exchange for considerable flexibility.

When you retire, you can usually take up to 25% of the total retirement fund as a tax-free lump sum, and then you buy an annuity with the balance – the income drawdown facility means you don’t have to buy an annuity (at least not until age 75), but instead draw down the income directly from your pension fund.

To the latter extent, income drawdown appears very straightforward, but there is more (much more) to take into account, as you will see in the sub-sections (see menu on right).

We must add that, at least in theory, you have the alterative to switch into an ASP (alternatively secured pension) at age 75, but, in reality, it has little or no value, and we know of no providers who are actively marketing such contracts for those at age 75.

What next?

If you are considering income drawdown, you must understand how it works in detail. The sub-sections (see menu on the right) will set you on the right track. And our personalised review will go through key issues again, and whether we believ this product is suitable for you.

For a personalised review go to "Our service" in the top menu, and choose option 3.

I am impressed by the inclusion of the facility for online purchase in the ISA scheme on your websit...
[read more]