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Flexi-access drawdown 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.
Under flexi-access drawdown, there is no limit to the amount of income that can be withdrawn each year. The first 25% of the pension fund is usually tax-free, and the rest is taxed as income, at the investor's highest marginal rate. Investors can choose to take regular income, make occasional withdrawals, or a combination of both.
Investors with capped drawdown arrangements can convert to flexi-access drawdown at any time. However, once the arrangement is converted it cannot go back to capped drawdown. Flexible drawdown arrangements automatically converted to flexi-access drawdown on 6 April 2015.
Investors may make further contributions to their SIPP after they have entered flexi-access drawdown as long as they have not fully crystallised their plan. Once investors start to take income in flexi-access drawdown, they will trigger the money purchase annual allowance. The contributions the investor (and others on their behalf) can make to their money purchase schemes whilst benefiting from tax relief will be limited to £10,000 per tax year.
Suffolk Life accepts drawdown to drawdown tranfsers, facilitating flexi-access drawdown for investors in pension schemes that do not currently offer it.
For more information and prices, please see our literature library.
Illustrations for flexi-access drawdown are available direct from our Illustration Wizard.