Income Drawdown in Northern Ireland

What is Income Drawdown?

When you retire, you don't have to go down the route of purchasing an annuity. Indeed, having spent the majority of your life paying into your pension, the thought of an annuity provider keeping hold of your money if you die in the early years, is probably not that palatable to you.

You may also not need an income right now but only want the tax free cash available. The rules allow this.

An alternative to purchasing an annuity is to take out the tax free cash, leave your pension invested, and take a portion of the pension pot each year as an income: hence the phrase income drawdown.

Income Drawdown – which you might also hear referred to as an Unsecured Pension – has the advantage of possibly leaving your family some legacy when you die as your pension pot (after a tax of 55%) passes on to your family according to your wishes.

However, there are risks with opting for Income Drawdown.

• Your income is not guaranteed for life: you only have an income so long as you have a pension pot, so if you empty your pot you will face later retirement with a much reduced income.
• As well as this, because your pension remains invested, the value of it could go down – at a time when you're probably not in a position to "replace" this loss with new money.

Because of the rules around Income Drawdown it's not for everybody.

Please contact us for more information and individual advice.