A-day pension query

whiteflag_3

A few questions for the experts in this area

What will the costs be for arranging such a deal?

I take it you cant just take the cash from your existing personal pension?

Are all pension companies offering this type plan?

Where can I get more info on these plans?

EdInvestor

exil wrote:

Hmmm. looks like with gilts at 4% I could take out about 6% (ie 5%*120%) at age 50 while 70 yr old Mum could take out 8 1/2%.I estimate I'd run out of capital in about 32 years whilst Mum would spend her last cent in about 18.

While you can take more out of the fund than you get with an annuity, if you think you might run out of money , then you'd better reinvest what you don;t need in your ISA so it keeps growing for later use

Is there a catch - specifically, I imagine it would be that gilts rates could go down in future causing you to eat into your capital too quickly using drawdown.

It's the other way round: if gilt yields go down, the amount you can take out is reduced - though as you will be older and your fund may have got bigger, this might not necessarily happen. The key factor with drawdown is to invest the fund well so it increases in value to give you a growing income without depletion, and not to spend more than your fund earns. You need to be willing to cut your income in a bad year if necessary.