We have rebranded Retirement Advantage products as Canada Life. Visit our Retirement Account and Home Finance pages.


Flexible Drawdown Plan -Take your tax-free cash and keep your income options open

Sandra

  • 55 years old
  • Would like to continue working
  • Wants to access her tax-free cash
  • Wants options to take ad hoc withdrawals if needed
  • Wants to remain invested for potential growth

Sandra plans to continue working but would like to access her tax-free cash from her pension to pay off her mortgage. She has no immediate plans to fully retire or take a regular income but would like the option to make ad hoc withdrawals if needed.

Sandra is happy to benefit from any potential growth by remaining invested.

Sandra’s pension fund, after taking her tax-free cash is worth £150,000. She can take withdrawals whenever she wants with no restrictions or set-up costs. Sandra understands any income she takes will be taxable at her highest marginal rate of tax. Sandra likes the idea that she can use all or part of her fund to purchase a lifetime income should she decide that a guaranteed lifetime income is important in the future.

Sandra wants the peace of mind that when she dies any remaining fund can be passed to her dependants. Canada Life, as the scheme administrator will retain discretion and her dependants could receive either 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 should Sandra die before reaching age 75.

Key benefits

  • Access all her tax-free cash at the start.
  • Withdraw as little or as much as she wants from the plan.
  • Remain invested for tax-efficient growth.
  • On death pass remaining funds to her beneficiaries free of inheritance tax
  • Access to funds from a wide choice of leading investment managers.
  • Keep her options open to purchase a guaranteed lifetime income at a later date.

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 a straightforward drawdown arrangement with the flexibility to take income without restrictions or set up costs
  • Want to remain invested in the markets for potential growth

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.


Taking withdrawals from the FDP that are greater than the growth of the chosen funds could leave you without an income or with a reduced income in the future.
You should speak to a professional adviser to ensure that FDP is suitable for you.


This case study can also be viewed as a PDF

 

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.