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Flexi-access drawdown

With flexi-access drawdown you can take some of your money (usually up to 25%) as a tax free cash lump sum.

The rest is used to pay you a taxable income. Either over a period of time or all at once.

Once you take a taxable income your annual allowance for future pension savings falls from £40,000 to £10,000. If you just take tax free cash it stays at £40,000 until you take a taxable income too.

Important information

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested.

Before you choose a SIPP, make sure you understand its aims and risks. Alliance Trust does not give advice. If you are unsure whether our SIPP is suitable for you, of the risks and commitments of investments and or of how much income to take and when, you should seek professional financial advice specific to your particular circumstances.

How much income can I take?

As much or as little as you want. You are in control.

Remember, apart from your tax free cash lump sum you’ll pay tax on income from flexi-access drawdown at your marginal rate(s). It is your responsibility to decide how much income to take.

Before deciding what to do, we strongly recommend that you use the free, impartial government guidance service Pension Wise, or get professional financial advice.


Case Study 1

Sam needs flexibility

  • Name: Sam
  • Age: 60
  • £200,000 in a SIPP

Sam has decided to take early retirement. She has a final salary scheme that will pay her an income of £15,000 a year. She gets her full state pension at 63 and is going to take her final salary scheme income from then.

In the meantime, Sam has decided to move all her SIPP money into flexi-access drawdown, taking her full tax free cash entitlement of £50,000 plus £10,000 in income (after tax). Together these give her an annual income over 3 years of £20,000. When her final salary and state pension kick in she plans to stop taking any income for a few years and then re-evaluate her plans.


Case Study 2

Robert wants to keep paying in to his pension

  • Name: Robert
  • Age: 64
  • £500,000 in a SIPP

Robert has no plans to retire and intends to delay taking his state pension. He does want to clear his £25,000 mortgage though. He is self-employed and earns £100,000 a year so he also wants to keep making significant payments in to his SIPP.

Robert moves £100,000 into flexi-access drawdown. He uses his 25% tax free lump sum on this to clear his mortgage leaving £75,000 (which may go up or down in value over time) available to pay a taxable income when he wants it. As Robert has only taken his tax free lump sum his annual allowance stays at £40,000.

These case studies are examples only and do not give advice.

Why save with Alliance Trust Savings

  • No set-up fees
  • One low annual charge of £252 a year (including VAT) - a provider charging 0.45% a year on a £100,000 pot means a charge of £450 a year
  • Manage your SIPP online
  • Wide investment choice

Important information

Laws and tax rules may change in the future without notice. The information here is our understanding in January 2018. This information takes no account of your personal circumstances which may have an impact on tax treatment.

Other charges may apply. For a full list of charges see our charges guide.

Free guidance

The ’Pension wise’ guidance service is a free impartial government service for anyone thinking of accessing their pension savings. It gives you details of your options and guidance to help you make up your mind what to do. We remind you about Pension wise before your planned retirement age.

Pension wise

Need advice?

If you want someone to look at your individual circumstances and positively recommend the best option for you, it’s financial advice that you need.

Find a financial adviser in your area:


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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.