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Income drawdown came about as the result of the “pension freedoms” legislation of April 2015. Before that date, most of a pension fund had to be used to buy an annuity. Annuities are basically guaranteed incomes for life.
The annuity system worked well when life-expectancy was shorter and hence retirement tended to be measured in years rather than decades. These days, however, its inflexible nature can make it unsuitable for people who expect a lengthy retirement and, hence, at least the potential for there to be significant changes in their circumstances.
Income drawdown basically allows a pension fund to be used in much the same way as a regular investment fund. You can live off the income it generates and you can pass it on to your heirs when you die.
This allows massively more flexibility, albeit at the price of more risk. The returns from annuities are guaranteed, investment returns are not. What’s more, the purchase of an annuity is a one-off expense, whereas income drawdown tends to generate ongoing administrative charges. Income drawdown, therefore, tends to be best suited to higher net-worth individuals who can absorb the investment risk.
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It’s important to plan ahead for your retirement. Here, we explain why pension planning is so important, and describe some of the options available to you. This information is intended only as guidance. For advice on your specific circumstances, please get in touch.
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[/et_pb_accordion_item][et_pb_accordion_item title=”Investment” open=”off” _builder_version=”3.0.47″]Investing money needs careful consideration and you need to be absolutely sure of the risks involved. This section provides generic information on different types of saving & investment. You should seek advice appropriate to your specific circumstances prior to making any decisions.
Read More [/et_pb_accordion_item][et_pb_accordion_item title=”Mortgages” _builder_version=”3.0.47″ open=”off”]A mortgage is likely to be the single largest financial commitment you ever make. There’s a wide range of mortgage products out there, with varying interest rates and repayment options available.
Read More[/et_pb_accordion_item][et_pb_accordion_item title=”Insurance” _builder_version=”3.0.47″ open=”off”]It’s important to ensure you put the right insurance in place to protect your home, it’s contents and your overall financial security.
Read More[/et_pb_accordion_item][et_pb_accordion_item title=”Protection” _builder_version=”3.0.47″ open=”off”]Life and Protection Insurance policies can protect you and your family from the financial consequences of death, a serious accident or illness, or unemployment.
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