Income draw down - hypothetical question

workingboy

One of my pensions is a Income Draw down.

I took a lump sum payment at the time of my retirement as allowed, then started my Draw down pension scheme with advice of a IFA.

A hypothetical question

If I wanted to take another lump sum say in 12 mths time from the Draw down fund.
Would this be allowed.

thanks

dunstonh

If I wanted to take another lump sum say in 12 mths time from the Draw down fund.
Would this be allowed.

You can take lump sums as you like until the fund runs out. Any ad hoc lump sums are treated as income and taxed as such in the year they are taken. e.g. if you are a basic rate taxpayer and take £10k, then you will receive £8k with £2k going on tax. (you may need to switch from capped to flexible but that is largely a small admin task with note of a few risk warnings - which are unlikely to be a concern for most people).

Your IFA may recommend you reduce your income as a result of this if the income withdrawal rate on the new lower fund value makes the current income level unsustainable.