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Drawdown

In the latter stages of your working life you will begin to consider your pensions options. Investing the fund into an annuity is the more traditional method for retiring but increasingly, a more common route is the pension drawdown facility. Within 6 months of your retirement date you will need to examine whether a drawdown contract is the right retirement option for you. A drawdown plan is simply the continuation of your pension whereby your fund remains invested in the market but is then used to pay an income predetermined by the Government Actuary Department (GAD). This income is taxable in the normal way and can be paid monthly, yearly, 6 monthly in advance or arrears. The benefits of drawdown are that the fund can pass onto your spouse or in some cases your family members and with careful investment planning could increase in value over the long term. It is widely accepted that the death benefits for a drawdown contract make this option more appealing than annuities however the recent reduction in GAD rates has opened the debate of whether these plans are truly suitable.

Discussing a drawdown contract with Romilly Financial will assist you in making the right decision. The benefits of this method of retiring are huge but you need to ensure that they are suitable to you and your investment requirements.