Pension drawdown allows you to cash in 25% of your pension tax free. You have worked hard all your life so you are entitled to take your tax free cash from your pension once you hit the age of least 55. Pension drawdown is a commonly used phases which means unlocking or releasing your pension cash once you reach the eligible age. If you want to drawdown the remaining 75% of your pension cash then you usually have to pay tax on this.
Pension drawdown can also allow you to draw an income while allowing your UK pension pot to grow. So you can get both benefits with your pension during drawdown: 1) you can drawdown some cash and 2) the remaining amount in your pension pot can continue to grow.
If your pension investments do well then your pension pot will do well and your pension fund will continue to grow. This is a huge benefit for your pension and any pension drawdown because it means you will have more money in your pension when it comes to your retirement. It is worth noting that there is a flip side to this also where the value of your pension can also go down in value, which also means that your income in retirement can also decrease meaning you could have less to life off and much less when it comes to your pension drawdown options.
What Are The Advantages Of Pension Drawdowns
One of the obvious benefits to you when it comes to pension drawdowns is the tax free benefits. You must have never withdrawn or accessed your pension pot before, you can only release or drawdown a lump sum amount from your pension once you are at least 55 years of age.
Other benefits also include; giving you much more control on how much income you want to drawdown and also how your pension is invested. When it comes to your pension these days, you have much more control over your pension. You have more flexibility to manage your pension the way you want to mange it and a way to make you feel more comfortable.
Another benefit of pension drawdown is in the event of a death. If you pass away before the age of 75 years of age your pension benefits and wealth can be passed down to your family which will be tax free. Since this drawdown benefit was introduced there has been a massive increase in final salaries being transferred to help take advantages of these benefits.
If you would like more information about pension drawdowns or releasing your pension when you are 55 or older feel free to get in touch with our team today.