Apt Financial Management

Income Drawdown

Income drawdown is a facility that allows an individual aged between 55 and 75 to defer the purchase of their pension from an insurance company. An income is drawn from the fund with the residual fund remaining invested.

The maximum income that may be drawn is 120% of the pension that could have been purchased calculated using Government Actuary rates. There is no minimum income which can be drawn, although a pension must be purchased at age 75.

Why use Income Drawdown?

Many individuals are reluctant to purchase a pension from an insurance company as they fear that they will not receive the whole of the purchase price back in income payments within their life time. 

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If you would like to discuss your retirement options and are unsure whether Income Drawdown is suitable for you please do not hesitate to contact us for advice.

With Income Drawdown the individual is able to choose to purchase the pension at the time when annuity rates are favourable.

If investment growth is achieved on the residual funds together with the fact that annuity rates increase with age, a higher pension may ultimately be purchased than could have been secured at outset.

In the event of death during income drawdown the residual fund can be returned to a surviving spouse.

What are the risks?

  • Unlike an annuity the income is not guaranteed for life
  • Charges are generally higher for Income Drawdown
  • Poor investment performance can affect income significantly
  • There is no guarantee that the pension ultimately purchased will be higher than the amount that could have been purchased at outset.

A Pension is a long term investment the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.


Apt Financial Management, 4 The Willows, Hulland Ward, Ashbourne, Derbyshire DE6 3EW
Phone: 01335 370 515