Freedom to cash in your entire pension...

Wealthy retirees will be for the first time able to withdraw their entire pension pot following the new rules for Income Drawdown which came into effect this month.

Flexible drawdown will allow pensioners who are income rich but cash poor the opportunity to free up capital to pay for holidays, clear mortgages and help the kids.

The all new Flexible Drawdown is only available to those who will not become a burden on the State by securing a minimum guaranteed income of £20,000 a year.

Wealthy retirees will be for the first time able to withdraw their entire pension pot following the new rules for Income Drawdown which came into effect this month.

Flexible drawdown will allow pensioners who are income rich but cash poor the opportunity to free up capital to pay for holidays, clear mortgages and help the kids.

The all new Flexible Drawdown is only available to those who will not become a burden on the State by securing a minimum guaranteed income of £20,000 a year.

At first glance we may be allowed to assume that this cash dipping is only available to the higher income bracket, but take an average 65 year old male with a combined Basic and State Second Pension of £12,000 and a company pension scheme of £6,000, who also has a personal pension pot of £75,000 – he would only need to secure a further £2,000 a year through an annuity purchase to qualify for Flexible Drawdown – this mean he would need to hand over £28,000 to an annuity provider for the income of £2,000 per year but the remaining £47,000 would be available to him in one go.

At Retirement and Investment Solution we can see the benefits of Flexible Drawdown for some clients, but would urge everyone to proceed with caution, any withdrawals are taxed as income and this may pop you over the higher income thresholds.

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