Flexible Access Drawdown (FAD)

Unlock a tax-free lump sum of up to 25% of your pension pot while keeping most of your savings invested. With the Flexible Access Drawdown, you can access your income whenever needed, allowing you to adjust your withdrawals per your changing financial situation.

Find answers to your most pressing questions about our pension planning services and process. The information provided in these FAQs does not constitute professional financial advice. We strongly recommend that you consult a professional adviser before proceeding with a financial transaction.

How much can you draw down from your pension each year?
There are no restrictions on the amount you can withdraw from your savings in a Flexible Access Drawdown FAD but determining a sustainable withdrawal rate is crucial to avoid depleting your savings. We begin by evaluating your investment risk tolerance and leverage our expertise to establish a target investment return for your portfolio. This information helps us estimate the maximum sustainable withdrawals you can make. To ensure that your financial plan remains on track, we conduct regular progress reviews.
What are the tax rules for flexi access drawdown?

Generally, you can draw up to 25% of the value of your savings as a tax-free lump sum. Any additional withdrawals are taxed as income and subject to standard tax allowances and rates. Withdrawals from a pension are not assessable for National Insurance, just Income Tax.

Note that this tax treatment depends on your circumstances and may be subject to change in future.

What are the main risks with a drawdown pension?
Longevity risk refers to the potential depletion or total exhaustion of your investment value if your earnings are less than your withdrawals, with this risk amplifying over time. Mortality risk highlights the challenge of your savings needing to sustain you longer than expected if you live beyond your anticipated lifespan. Inflation risk signifies the gradual erosion of your savings’ spending power when inflation outpaces your investment returns. Lastly, investment risk underscores the absence of guaranteed returns, meaning the value of your savings and their income can fluctuate, potentially diminishing the amount available for future withdrawals.
What are the pros and cons of a flexible access drawdown pension?
Pros include the ability to draw your tax-free lump sum immediately while deferring income to a later date, offering flexibility in managing your income by increasing, reducing, suspending, or restarting withdrawals as needed. You have control over your investment strategy, whether cautious, balanced, or adventurous, and any profits generated within your drawdown pension are exempt from personal income tax and capital gains tax. Additionally, you can purchase an annuity in the future, which may become more favourable as you age, and you can leave any remaining funds in your pension to your loved ones upon your passing.

On the downside, a drawdown pension is complex and requires annual reviews; although not legally mandated, consulting a professional adviser may simplify management. Furthermore, there is no assurance that your income will match current annuity offerings, and the value of your investments and your potential income can fluctuate, impacting your retirement withdrawals. Additionally, there is a risk of outliving your savings as increased longevity may deplete your fund faster. Given the complexity of this area and the significant consequences of making poor decisions, We highly recommend you seek advice from a qualified professional before proceeding with a flexible access drawdown.

What's the differnece between flexi-access drawdown (FAD) and UFPLS?

Flexi-access drawdown and UFPLS, or Uncrystallised Funds Pension Lump Sum, are two distinct options for accessing your pension savings, each with benefits and considerations. Flexi-access drawdown allows you to withdraw money from your pension pot while keeping the rest invested, giving you flexibility in how much and when you take your income, which can help manage cash flow over time. In contrast, UFPLS enables you to take lump sums directly from your uncrystallised pension funds, where each withdrawal consists of tax-free cash and taxable income, offering a straightforward and immediate way to access your funds without setting up a drawdown arrangement. Understanding these differences is essential in making informed decisions that align with your financial goals and retirement plans, and it’s always wise to consult with a financial advisor to determine the most suitable approach for your circumstances.

Is an annuity better than flexi-access drawdown?

When considering whether an annuity is better than a flexi-access drawdown, it ultimately comes down to your personal financial goals, risk appetite, and lifestyle needs during retirement; annuities provide guaranteed income for life, offering peace of mind and simplicity, while flexi-access drawdown allows for greater control and flexibility over your withdrawals, catering to those who prefer to manage their investments actively and potentially leave a legacy. Understanding the nuances of each option is crucial, and our experienced team is here to help you weigh the benefits and drawbacks tailored to your unique circumstances, ensuring you make a decision that aligns with your future aspirations.

Get Expert Advice Today

Embark on your path to a brighter financial future with a complimentary consultation at Fintegrity. Our dedicated team specialises in personalised financial planning that demystifies complex issues, enabling you to make confident decisions. We are committed to your success. Reach out to us today.

Neil Jenkins, Financial Planning Expert
Since April 2015, all new pension drawdown products have provided the option for flexible-access drawdown, allowing your pension pot to be invested while enabling you to withdraw an income as needed. You have the freedom to take out any amount from your pension and dictate how your funds are managed. This straightforward method allows you to access cash from your pension, with withdrawals starting from your 55th birthday, increasing to 57 from April 2028.

Why Choose Fintegrity

Our services are designed to provide peace of mind and financial security for you and your loved ones.

Personalised Approach

We tailor our strategies to meet your unique financial situation and goals.

Experienced Advisors

Our dedicated team comprises highly skilled professionals with a wealth of experience in financial planning.

Proactive Planning

We emphasise innovative strategies designed to enhance your investment performance while effectively reducing the burden of taxes.

Transparent Communication

We ensure clear and straightforward communication, keeping you informed every step of the way.

What Our Clients Say

Get Expert Advice Today

Embark on your path to a brighter financial future with a complimentary consultation at Fintegrity. Our dedicated team specialises in personalised financial planning that demystifies complex issues, enabling you to make confident decisions. We are committed to your success. Reach out to us today.

Neil Jenkins owner of Fintegrity

Expert financial planning advice is essential for securing your future in a world of financial change. Whether managing investments, planning for retirement, or providing financial security for your family, professional guidance can help you make informed decisions aligned with your goals, giving you the confidence to enjoy life, knowing your financial health is in capable hands.

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