Money in a pension plan is usually invested so its value can fall as well as rise and you could get back less than was paid in. Laws and tax rules may change in the future. Your own circumstances and where you live in the UK will also have an impact on tax treatment. Transferring won't be right for everyone.
What is pension drawdown?
Do you want flexibility on how you access your money? Pension drawdown is a flexible way to take income from your pension pot when you turn 55 (57 from 6 April 2028). You can usually take out up to 25% of your pension savings tax free, and the rest will stay invested. You can take out money whenever you like, but you'll pay income tax on anything over your 25% tax-free amount.
Pros
Taking your money: You can set up an income that you can stop, start or change at any time.
Any money that's left stays invested: It has the potential to grow in a tax efficient way.
Pass on what's left in your pension plan: You can leave what’s left in your pension plan to your loved ones when you die, generally free from inheritance tax.
Investment choice: You're in control and can choose where you invest your remaining money. You can usually pick your own funds, choose a ready-made option to suit your needs or you might want an adviser to do this for you.
Change your mind later: You can convert to a Guaranteed Income for Life (annuity) at any point.
Cons
You need to make sure your money lasts:
How much money you take, when you take it and how your investments perform will affect how long your pension pot will last. You need to manage your withdrawals and make sure your pot lasts as long as you need it to.
You need to consider your investments: You need to manage and make sure your investments remain right for you. Remember the value can go down as well as up and isn't guaranteed. You’ll also continue to pay investment charges.
Your state benefits could be affected: You should check this isn’t going to be a problem before going ahead. For more information visit the MoneyHelper website
The amount that can be paid into pension plans could be reduced: Taking more than your tax-free lump usually lowers the maximum amount you or an employer can pay into any of your defined contribution pension plans in a tax year without attracting a tax charge. This could reduced from £60,000 to £10,000 and you won't be able to carry forward unused allowances from previous years.
Access to free impartial guidance.
We recommend you seek appropriate guidance or advice before making any decisions about your pension. You can get free guidance over the phone or face to face with Pension Wise, a service from MoneyHelper. Go to www.moneyhelper.org.uk/pensionwise or call 0800 138 3944.
It’s important to shop around and compare providers. As the flexible income (drawdown) amount you take is set by you, the things to consider are the investments available and the charges you have to pay.
Why choose Standard Life for pension drawdown?
Easily manage your money
You can start to access your money flexibly and easily keep track of the rest from your online dashboard or app.
Access to our retirement experts
Our pension experts are based in the UK, and ready to help you. Need help with your application? Call us on 0800 634 7482
It's free to drawdown
We won't charge you to access your money in our personal pension, though charges will still apply to the money you leave invested.
Standard Life was awarded "Best Income Drawdown Provider" at the the MoneyFacts Investment Life & Pension awards 2023
Let us know if you have other pension plans you'd like to transfer
Once complete, set up drawdown online or by phoning us on 0800 634 7482. Call charges will vary.
If you want to access your money straight away, please call us to transfer your pension so we can move your pot straight into our drawdown investment option.
You can usually take up to 25% of your total pension savings, across all pension plans, tax free. You can take as much or as little of this as you like, but you'll be subject to income tax on any money you take beyond 25%.
You can also take all your tax-free cash at once if you want, but that doesn't mean you should. Remember that the longer your money stays invested inside your pension plan, the more potential it has to grow and the higher your overall tax-free amount could be. Of course, that's not guaranteed.
Tax rules and legislation may change and your own individual circumstances, including where you live in the UK, will have an impact on your tax treatment.
Pension drawdown allows you to take a flexible income or lump sums from your pension plan as and when you need to. You can stop, start, or change this at any time and the rest of your pension pot stays invested so it has potential to grow in value.
Remember, as your money remains invested, its value can go down as well as up and you may get back less than what you paid in. This means that if markets suddenly go down, then continuing to withdraw the same amount can have an impact on the future value of your pension pot.
Annuities, on the other hand, give you guaranteed income for life. Pension drawdown doesn't provide this, meaning your pension pot could run out. So you need to carefully plan the amount you choose to take and regularly review your investments. However, once you're in drawdown, you can opt to buy an annuity at any time.
