Flexi-access Drawdown

retirement planning and wealth managers

What is a pension drawdown and who has access?

Pension drawdown offers you the freedom to flexibly access your pension as and when
you choose in the form of lump sums and income payments. For this reason, it is known as Flexi-access Drawdown.

In 2015 the pension freedoms opened up drawdown to a far wider people with defined contribution pensions, removing the need to purchase an annuity. 

If you’re 55 or over, you have the option of accessing your pension using Flexi Access Drawdown. Flexi Access drawdown means that you can keep most of or all of your pension pot
invested and draw an income from it. 

However, unlike an annuity, your income is not guaranteed for life. Therefore income drawdown carries more risk that your money could run out. In return for the higher risk, you gain more income flexibility, as income drawdown lets you vary the amount you take out according to your needs. Usually, you can also be paid up to 25% as a tax-free lump sum with the remainder invested as you choose.

Flexi Access drawdown works a bit like having your pension pot as a bank account, offering the ability to fund your retirement by:

  • Leaving your pension savings invested and generating an income
  • Withdrawing lump sums
  • Or a combination of the above.

Before drawing down your pension, you are entitled to take up to 25% of your pension pot
as a tax-free lump sum, also known as a pension commencement lump sum (PCLS).

You do not have to take the whole 25% upfront or move your entire pension to drawdown; you can do so gradually, spreading out the benefit over time.

Pension Freedoms

Pension freedoms were brought into place in 2015 and brought in new rules giving people more freedom to access their pension how they like. Those aged 55 and over no longer have to purchase an annuity to access their pension income but can instead enter drawdown or take a cash amount.

With pension freedoms, you’re now able to take the whole fund in one go. 25% will still be tax-free, while the remaining 75% will be taxed at your regular Income Tax rate.

You can still buy an annuity if you prefer, you’re amend to or you can keep it invested and withdraw money each year through a drawdown.

Advantages and Disadvantages of Flexible Drawdown



Flexi-Access drawdown lets you vary your income up and down in any given tax year helping you control the amount of tax you pay.

Tax-Free Pension Cash

You’re entitled to take up to 25% of your pension pot tax-free, as a lump sum or gradually.

Investment Opportunity

Your pension stays invested during retirement and has the chance to continue to grow.

Tax-free investment 

Pensions that remain in a pension or drawdown retain tax-free investment return.

Free From Inheritance Tax

Flexi-Access Drawdown allows you to pass on any remaining invested funds free from inheritance tax.

Investment Options

Access to a wide range of investment options.


As with many things, there are some disadvantages to Flexi-Access drawdown. Getting expert advice can be beneficial when deciding on the right type of pension for you. An adviser can help you make the right choices when it comes to your pension and avoid you taking too much income and running out of money.

Your pension fund could run out.

With flexi-access drawdown, planning is essential. If you take out too much money too early, you could run out. There is also no guarantee that investments will perform.

Drawdown income isn’t guaranteed.

With a flexi-access drawdown, your pension pot is finite, unlike an annuity which provides you with a guaranteed income for the rest of your life.

You take on the investment risk

Another reason to speak to an adviser when thinking about flexi-access drawdown is to assess your risk appetite and reduce the chance of your investments performing poorly. Ultimately, you’re invested in the markets and therefore at their mercy.

Small pension pots aren’t suited to income drawdown

The smaller the pension pot, the higher the risk of it running out.

Potential to overpay tax

Taking income from various sources can become confusing, and you could be pushed into a higher tax bracket. A financial adviser can help you manage your income to make sure you don’t overpay tax.

Importance of Getting Expert Advice

A pensions adviser can help you balance the benefits of flexi-access drawdown pensions against the potential pitfalls if you choose to fund your retirement this way.

Income drawdown may not be the best option for everyone; therefore getting professional advice can help mitigate some of the downsides that come alongside drawdown. 

An adviser can help you to manage your withdrawals to make sure you’re not withdrawing too much too soon. They can also help to boost the resilience of your investments against market downturns.

Can I still pay into my pensions if I’m using income drawdown?

You can carry on making pension contributions if you are using income drawdown. You will still receive tax relief on personal contributions providing you are under 75, and you are within your contribution limits.

The Money Purchase Annual Allowance means that once you have taken your first taxable payment from drawdown, the amount you can pay into money purchase pensions is limited to £4,000 each tax year. 

How much of my pension do I need to move into drawdown?

You don’t have to move all your pension into drawdown; you can move a bit at a time. Usually, you can take up to 25% of the portion as a tax-free lump sum.

How much will I need?

Knowing how much income you can afford to take under income drawdown needs careful planning. There are several different things to consider when planning for income drawdown:

  • The size of your drawdown fund
  • The investment performance of funds over time
  • Other sources of income
  • How long you expect to live
  • Whether you want to provide for someone after you die

Factors like inflation, investment performance and changes to income could mean that you may sometimes need to adjust the income you are taking.

What happens to my drawdown pension when I die?

In most cases, a drawdown pension can be passed to beneficiaries free from inheritance tax.

Your beneficiaries can usually withdraw from your pension tax-free if you die before 75. If you die at or after 75, the income withdrawn from your pension by your beneficiaries will be taxed as their income.

How do I choose my investments?

If you’re not sure how to choose your investments when you’re in an income drawdown, our advisers can help you choose the most suitable investment for you.

How old do I need to be to apply for drawdown?

You can’t access the money in your pension or apply for drawdown until you are 55 or over. If you are unable to work because of health reasons, the age could be lower.

How to start with drawdown

Our chartered advisers can help you decide if drawdown is right for you. 

By building a personal drawdown illustration, our advisers can show how your chosen income withdrawals and investments could affect your pension value over time. We can also give an estimation of when your money might run out.

If you apply for drawdown, provided nothing is outstanding you can receive you tax-free payment up to 10 working days from when you apply. 

 With drawdown, you can take out as much income as you like. You can also change the amount you withdraw at any time. Making sure you have enough money to last takes careful planning; our chartered advisers can help work out a plan that will make sure your pension lasts.