Drawdown Consultation: Flexible Drawdown
by Ashley Clark, Director - August 2010
There is currently a requirement when you retire to buy an annuity income (known as secured income) with an insurance for your pension fund by the age of 75 at the latest even if you are in a special drawdown plan called an Unsecured Pension (USP).
In some cases, people can continue with the non-annuity USP route after age 75 called Alternatively Secured Pensions (ASP) - but these have huge tax penalties on death.
Lose it on death either way:
Removing the need to buy an annuity at age 75: Summary
No Compulsory Annuity - removing the need to buy an annuity by age 75 wef 6 April 2011
Lifetime allowance test at 75 will remain (you are taxed if your pension funds are too big in total - currently £1.8m).
Current Drawdown Rules:
Capped Drawdown
Flexible Drawdown
New Minimum Income Requirement (MIR) test at the point flexible drawdown will be set – in short if you can prove your income is above the (MIR) then you will be allowed flexible drawdown.
MIR Amount
MIR Test - what will be counted as income?
Other points:
Tax Free Cash sums will be allowed to taken after age 75 if you have not taken any benefits from that pension i.e. it is not crystallised.
Death Benefits
Tax relief only available on pension contributions before age 75
Triviality rules will be allowed after age 75 (the ability for small pensions of 1% or less of the lifetime allowance to be taken as lump sum)
Contact us today and book your flexible drawdown consultation.