Income drawdown plan

When you come to retire, you have two main options: you can either buy an annuity, or you can defer buying an annuity by taking what is called an ‘unsecured pension’ or more commonly ‘income drawdown’. This facility enables you to take up to 25% of your fund as a tax-free cash lump sum and leave the remainder of your pension fund invested. In the meantime, you can take income as and when you need it from the fund; subject to certain Inland Revenue limits. However, you are not obliged to take any income at all, if you do not need it.