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 informationPlease 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.
Related documentsVisit our dedicated SIPP literature page.