Capped Drawdown – Good Planning Can Improve Your Future Income

By Author: Peter Parker
Total Articles: 25
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Capped drawdown was introduced by HM Treasury as a replacement for the unsecured pension scheme more commonly known as income drawdown. Under the capped income drawdown plan, investors are free to leave their retirement fund invested whilst drawing an income which is capped or limited to the maximum equivalent of a single life level annuity.

Capped pension schemes also introduce some changes to the death benefits of those who do not purchase an annuity. If an annuity is purchased by the pensioner, the accumulated pension fund is exchanged for the annuity. If a spouse’s pension is not arranged at the time of the annuity purchase, then payments will cease on the death of the annuitant and the unused pension funds are lost. Under a capped drawdown scheme, however, there are a number of options available to the surviving dependants: capped drawdown income can continue to the dependant, the remaining fund value can be paid out as a lump sum or an annuity can be purchased.

The basics of capped pension drawdown plan are relatively simple and easy to ...
... understand. Some areas of the rules can be confusing and you may need the advice of a financial expert to fully understand how it can affect your savings and income.

If you need cash from the pension, you can use it just like an annuity to get tax free pension. However, rather than taking a fixed income with the remaining funds as you do with an annuity, here you are free to withdraw income from the plan subject to the cap.

Capped drawdown is in fact a means of taking pension benefits without buying an annuity. One big advantage with this scheme is that there is no upper age limit. For those under 75 years, the upper income limit is reassessed every 12 months and the assessment is based on age and fund size.

In case you are searching for a reliable and dependable consultant for capped drawdown scheme, then you have arrived at the right destination. With over 25 years of experience of providing strategic Financial Planning and Consulting, Gerard Associates can offer the best guidance and assistance for capped drawdown. Please refer to GerardAssociates.co.uk for more information.
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