17:23 24 February 2013
Drawdowns are very complex and the laws regarding them have changed frequently over recent years. Before we share these points of consideration, we want to recommend that if you are seriously considering drawdowns as an option, it is wise to seek professional financial advice.
•Income drawdown allows you to receive an income from your pension while still leaving the funds invested and heirs can inherit any remaining amount.
•Income choices range from no income to 100per cent of the limit cap.
•Caps are set based on age by the Government Actuary’s Department.
•Drawdowns are not permanent and you can opt to purchase an annuity at any time if you believe an annuity will be in your best interest.
•Flexible drawdowns do not have to adhere to the limits established by the Government Actuary’s Department, but you must meet the Minimum Income Requirement (MIR).
Since the results of a drawdown past the age of 75 may mean lower income, it is best to only use this option if you have a pension income, and preferably an additional source of income. When doing your retirement planning, if you choose this option, be sure to take into consideration the need to purchase an annuity in the future.
Make sure to get details from a financial adviser regarding drawdowns and annuities when doing your retirement planning and don’t be afraid to ask for multiple quotes, even if you aren’t sure that an annuity is right for you.
You need the information to make sure you have the best options available. Drawdowns have a lot of details which may give you greater flexibility, or which you may feel create a liability. Every person’s situation is unique.
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