Quick Information on Income Drawdown and its Various Benefits

Under income drawdown plans, a pension lump sum of up to 25 percent of the total fund is paid and the amount required for income is taken. There is no minimum income level while the maximum income that can be taken is 100 percent of the Actuary’s Department relevant annuity with no guarantee.
Income drawdown rules allow members to crystallize any part of their fund depending on the income they need. The income drawdown plans that are not entirely crystallized (choosing not to utilize 100 percent of the fund) will hold both the types of monies; crystallized and free amount. This is known as phased income drawdown.
In income drawdown, the level of income that a member receives is decided by the value of funds as stipulated by the GAD or Government Actuary’s Department limits. You are free to choose any levels of income drawdown rates but this will be reassessed every three years according to the laws of income drawdown explained by your income drawdown providers.
Income drawdown allows members to delay buying an annuity by taking a pension commencement lump sum of up to 25 percent. Phased income drawdown on the other hand is a plan which is a combination of PCLS and income and used each year to help you get the desired income. Only that amount needed to provide a regular income is moved into income drawdown while the balance amount remains untouched. According to income drawdown advice companies, this combination provides maximum flexibility.
Income drawdown death benefits allow the beneficiaries to continue with the plan or use the money to buy an annuity. Dependants other than a surviving widow, widower of civil partner can receive a lump sum but taxed 55 percent of the amount. They can buy an annuity of continue with the income drawdown. Income drawdown calculator can be used to find out how a particular plan can work for your specific investment and income situation.
Income drawdown is a complex law to understand and you must consider seeking the advice of an independent financial consultant, well versed in pension laws. It can help you make sound decisions to secure your future life.