Capped drawdown operates in a similar way to unsecured income which it replaced. It is a viewed as more flexible option than an annuity, and allows the investor to keep their funds invested past retirement age although in doing so the value of the pension fund can fall as well as rise, and benefits are not guaranteed.

With capped drawdown, investors are able to choose how much income to draw each year and in what way (regular or lump sum), subject to a cap. The Government has set a maximum limit for the amount of income the investor can receive. This is 100% of rate set by GAD (Government Actuarial Department. 

The income limit is every three years and then every year after the investor turns 75, with the maximum income being adjusted if necessary. At each review, we supply an updated illustration showing the possible future benefits, which you will be able to review with your client.

Investors may make further contributions to their SIPP after they have entered capped drawdown if they have not crystallised the whole of the fund.   

For more information and prices, please see our literature library.

Illustrations for capped drawdown are available from www.suffolklife.co.uk/asillustrate.