What is a drawdown pension?
A drawdown pension, sometimes known as income drawdown, enables you to withdraw 25% of your pension as a tax-free lump sum, with any further withdrawals being taxed alongside your income. The remaining money is invested, providing a fund that you may withdraw from at any time (drawdown). You must be over the age of 55 to qualify.
Drawdown pensions offer more flexibility – the amount you choose to withdraw as income is up to you. It can be taken alongside, or instead of, a fixed income from an annuity.
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