Pension Drawdown
A way of taking money from your pension pot while leaving the rest invested.
Pension drawdown, sometimes called flexi-access drawdown, lets you take money from your defined contribution pension while keeping the rest of your pot invested. You can usually start drawing down from age 55 (rising to 57 from April 2028). When you move into drawdown, you can take up to 25% of your pot as a tax-free lump sum, and then withdraw the remainder as taxable income whenever you choose.
The key advantage of drawdown is flexibility. Unlike an annuity, you decide how much to take and when, and your remaining pot stays invested with the potential to grow. However, this also means your pot can go down in value, and there is a real risk of running out of money if you withdraw too much or your investments perform poorly.
Drawdown is one of the most popular ways to access a pension in the UK. It suits people who want control over their income in retirement and are comfortable with some investment risk. Many people combine drawdown with other options, such as taking a smaller annuity for guaranteed income alongside flexible withdrawals. It is worth taking financial advice before entering drawdown, as the decisions you make can have a significant impact on your retirement income and tax position.