The Pros & Cons Of Capped Drawdown Pension Plan

By Author: Peter Parker
Total Articles: 25
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The main advantages of capped drawdown plan are:

•You can withdraw a tax free lump sum
•Income can be varied but subject to an annual maximum
•You are free to take the lump sum and no income if you do not have the need for a regular income
•You can avoid buying an annuity even after age 75.
•You don’t have to decide whether to include your spouse’s benefits when you buy a capped drawdown pension plan
•The fund can remain invested allowing it to grow and become bigger
•In the event of death, the fund can be passed on to your dependants.

There are some disadvantages of the capped pension scheme, the biggest one being that annuity rates could go down should you decide on buying an annuity with your remaining funds at a later stage. Another disadvantage is that the capped drawdown value could decrease with time.

Capped pension calculators can be used to make a quick assessment of how the scheme can affect your future earnings and savings. Using advice from independent financial experts can help you understand the drawdown plans better. They will be able ...
... to give you the right retirement pension advice and help you pick a plan that meets your specific income and saving needs. They will also be able to guide you about the best annuity rates in the UK and help you understand them in the context of your own saving needs.

Capped drawdown rules are applicable to those who have unsecured pensions as at 5th April 2011. The rules are also applicable to those who have entered Alternatively Secured Pensions or ASP before 22 July 2010 from the beginning of the annual drawdown period in which 6 April 2011 falls.

Capped Drawdown – In Brief
Capper drawdown or income drawdown is a pension scheme introduced by HMRC (Her Majesty Revenue and Control) as on April, 2011. Thus, with this pension scheme, pensioners based in UK can now invest their pension funds in any investment scheme, and earn the income derived from that investment. The total amount of income generated is fixed by the government, hence the term Capped Income Drawdown. Earlier, pensioners based in UK had only option for their underutilized pension scheme, which was to buy annuity at the government prescribed rates. However, with capped drawdown scheme being introduced, pensioners now have more than one option and can effectively utilize their pension scheme for higher incomes.Your income is not guaranteed and could go down necessitating regular monitoring of the capped pension drawdown.

Gerard Associates provides the best consultancy for capped drawdown program specifically targeted for UK pensioners. With over 25 years of experience and certified Financial Planners and expert Pension Consultants in its arsenal, Gerard Associates can provide the best consultancy for this scheme. You can visit the official website of HMRC to know more about Capped Income Drawdown by clicking here: http://www.hmrc.gov.uk/manuals/rpsmmanual/rpsm09103530.htm and you can visit Gerard Associates by clicking here.
Harris works at Gerard Associates, which is a Financial Services Authority authorised and regulated firm with offices in Bristol and Tiverton. For more information about income drawdown please visit us at GerardAssociates.co.uk