This feature was permitted up to 5 April 2015 and remains an option for those who have existing capped drawdown.
For capped drawdown, after payment of any tax-free cash lump sum, the remaining assets provide an income to the member determined by reference to Government Actuary's Department (GAD) tables. These tables set the maximum annual pension allowable and equate (approximately) to the annuity which could be secured by the client’s fund on the basis that there are no pension increases and no dependant's pension. There is no minimum annual pension.
Capped drawdown will continue to be subject to the maximum levels of income and GAD rates along with the 3-yearly and annual reviews. However, if income exceeds 150% of the GAD rate, clients will automatically convert to flexi-access drawdown.
Where income remains within GAD limits clients can continue to contribute up to the £40,000 Annual allowance (for tax year 2018/19) but if they move to flexi-access drawdown the maximum that can be contributed to their pension each tax year will be reduced to £4,000 and the carry forward option will not be available.
From 6 April 2015 new pension rules provide greater flexibility for clients to take unlimited income from their pension. Clients already in capped drawdown on this date who want to exercise the greater pension freedoms will need to request to move to flexi-access drawdown, where there are no restrictions on the amount of pension income that can be taken.
For treatment of funds on death, please see Death benefits.
Whatever your retirement needs, one of our experts will be happy to discuss how we can help you achieve your goals.