- 65 years old
- Is in good health
- Wants to fully retire
- Wants to access all his tax-free cash
- Wants to remain invested for potential growth
- Wants the flexibility to vary or even stop taking an income in the future.
Bill plans to fully retire and give up working but would like to access all his tax-free cash to pay off outstanding debts and buy a new car. As Bill plans to fully retire, he will require an income but wants the flexibility to increase, decrease or stop payments should his needs change. At the moment Bill’s wife still works and provides enough income for the both of them, so he only needs an income to cover discretionary spending.
Bill’s key objectives are to take all his tax-free cash and receive an income whilst remaining invested to benefit from any potential investment growth. He also wants the flexibility to be able to change the level of income in the future.
Bill has £150,000 to invest after taking all his tax-free cash and decides, with his adviser, to take a regular income from the plan. There is no one off cost to start taking income drawdown and no additional cost to vary income in the future. There are also no limits on the level of income Bill can take although he understands that any income he takes will be taxable at his highest marginal rate of tax.
Bill also likes the flexible death benefits, knowing that his beneficiaries could receive either a lump sum or a beneficiary’s drawdown with any remaining fund he leaves on death. To ensure the death benefits remain outside Bill’s estate and free from inheritance tax, Canada Life, as the scheme administrator, will retain discretion as to the type of benefit payable and in the case that a lump sum is paid, who shall benefit. The benefits would also be paid free of income tax should Bill’s death occur before reaching age 75.
Key benefits for Bill
- Access all his tax-free cash at the start
- Withdraw as little or as much as he wants from the plan
- Remain invested for tax efficient growth
- Pass any remaining benefits onto beneficiaries free of inheritance tax should he die with funds still left in the plan
- Access funds from a wide choice of leading investment managers
- Keep his options open in terms of being able to stop or change the level of income he takes, or deciding to purchase a guaranteed lifetime income for the remaining part of his retirement should his objectives change in the future.
The CanRetire Flexible Drawdown Plan may be suitable for clients that:
- Are aged 55 or over
- Have a minimum of £10,000 to invest (after tax-free cash)
- Are looking to access all their tax-free cash from the start
- Looking for income flexibility
- Want to remain invested in the markets
The value of the plan can go down as well as up and you may not get back the full amount you invested.
The fund value and any income from that fund are not guaranteed and may fluctuate dependent on investment performance.
Your fund may not sustain an income throughout your lifetime.
Taking any income from the FDP, in addition to your tax-free cash will trigger the Money Purchase Annual Allowance (MPAA), which will reduce the amount that can be paid into a defined contribution (money purchase) pension scheme.