- 55 years old
- Wants to access her tax-free cash
- Wants option to take ad hoc withdrawals if needed
- Wants to remain invested for potential growth.
- Wants to leave any funds to her dependants
A retirement solution
Sandra plans to continue working but would like to access her tax-free cash from her pension to pay off her mortgage. As she has no immediate plans to retire, she does not require income but would like the option to make ad hoc withdrawals if needed.
Sandra would like to benefit from any potential growth by remaining invested in the markets.
Sandra’s pension fund, after taking her tax-free cash is worth £150,000. She can take withdrawals whenever she wants with no restrictions on the amount withdrawn. Sandra understands any withdrawal will be taxable at her highest marginal rate of tax. Sandra likes the idea she can use all or part of her fund to purchase a guaranteed lifetime income should she decide this is important in the future.
Sandra also wants to be sure that when she dies any remaining fund can be passed to her dependants. Canada Life as the scheme administrator will normally follow Sandra’s wishes and pay any death benefits either as a lump sum or income from a beneficiary’s drawdown. These benefits would normally be paid free of Inheritance Tax and could also be paid free of income tax assuming Sandra’s death occurs before reaching age 75.
- Access all your tax-free cash at the start.
- Withdraw as little or as much as you want from the plan.
- Remain invested for tax-efficient growth.
- Pass benefits onto beneficiaries free of Inheritance Tax.
- Access to funds from a wide choice of leading investment managers.
- Keep your options open.
The FDP lets you take all your tax-free cash at the start of the plan with flexibility as to how much and when you decide to take income.
On your death any funds left in your plan, can be paid to your beneficiary. You can elect for them to receive a lump sum death benefit or income from a beneficiary’s flexi-access drawdown. Please note that any discretion in the payment of death benefits is held with the scheme administrator of the plan.
The value of the plan can go down as well as up and you may not get back the full amount you invested. You should speak to a professional adviser to ensure that FDP is suitable for you.
Who is it for?
The FDP may be suitable for you if you are aged 55 or over, with at least £10,000 to invest from another pension plan and looking for flexibility to manage your retirement fund.
The value of the plan can go down as well as up and you may not get back the full amount you invested.
Annuity rates may be higher or lower in the future and so any annuity purchased in the future may be more or less than could be purchased at present rates.
Any income taken from your flexi-access drawdown is subject to income tax and you may pay significant tax if you withdraw large amounts within a tax year.
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.
You should speak to a professional adviser to ensure that FDP is suitable for you.