Pension Fund Withdrawals

It is possible to make regular withdrawals from your pension fund to use as income. The withdrawals will be taxed as income. These types of pension plan are commonly known as drawdown pension plans.

One advantage of this arrangement is that the pension fund is still invested, and if the pension investment is successful your income may be able to increase in future. Another major advantage is that if you die, the whole fund may be available to provide benefits for your spouse or dependents.

You do not have to decide straight away whether you want to provide a pension after your death for your spouse or partner, or at what rate you want the pension income to increase down the years. These decisions are normally final when you arrange an annuity - for example it could be wasteful paying for a surviving spouse's pension if your spouse then dies before you.

There are risks attached too. If your investment does not do well, your pension fund may shrink, and this may reduce the amount of income that you are able to take later. There is no guarantee that if you buy an annuity later, it will give you as much income as if you had taken an annuity from the start.

Pension fund withdrawal is complex and should not be entered into without professional advice. For further advice, contact us.