Pension drawdown and HMRC rules

Gudrun

Hello, on the Citizens Advice website is the following statement:

"Income drawdown can be an expensive option. There will be ongoing charges for managing your investments. Rules set by HM Revenue and Customs mean that the amount of income you take out of your pension fund has to be reviewed regularly. There are charges for this as well."  

I haven't been able to find these HMRC rules anywhere - is the statement correct, and can anyone perhaps point me to where HMRC set out these rules?  Many thanks!

Linton

Gudrun said:

Hello, on the Citizens Advice website is the following statement:

"Income drawdown can be an expensive option. There will be ongoing charges for managing your investments. Rules set by HM Revenue and Customs mean that the amount of income you take out of your pension fund has to be reviewed regularly. There are charges for this as well."  

I haven't been able to find these HMRC rules anywhere - is the statement correct, and can anyone perhaps point me to where HMRC set out these rules?  Many thanks!

I think what this is about is ….

Pre 2015 the amount you could drawdown was limited to roughly what an annuity would pay unless you could prove you had sufficient other guaranteed income.

I think this would still apply if you hadn’t converted your pre 2015 drawdown arrangement to the post 2015 rules. Either that or Citizens Advice have forgotten to update their website.

Gudrun

Thank you, Linton.   What I was wondering was - if I decide to take the drawdown option with my pension, am I then obliged by HMRC to get my finances reviewd regularly by an IFA?

Linton

Gudrun said:

Thank you, Linton.   What I was wondering was - if I decide to take the drawdown option with my pension, am I then obliged by HMRC to get my finances reviewd regularly by an IFA?

No, all the restrictions on drawdown were removed in the 2015 reforms

Marcon

Linton's already answered the question, but in case you're interested, this article is short, clear and helpful: https://www.drewberryinsurance.co.uk/pensions-advice/faqs/how-are-the-new-pension-drawdown-rules-different-from-the-old-ones

dunstonh

"Income drawdown can be an expensive option. There will be ongoing charges for managing your investments. Rules set by HM Revenue and Customs mean that the amount of income you take out of your pension fund has to be reviewed regularly. There are charges for this as well."  

There are no rules that say it has to be reviewed regularly.
I suspect the information you are reading hasn't been updated for sometime as they refer to things required before 2016.   What is known today as capped drawdown did have to get a GAD review every 3 years (or in other certain circumstances).  And drawdown plans were more expensive back then.

Critical yield calculations were more important back then as well.

Thank you, Linton.   What I was wondering was - if I decide to take the drawdown option with my pension, am I then obliged by HMRC to get my finances reviewd regularly by an IFA?

HMRC doesn't set the rules.  So, that bit is wrong as well.  
And IFAs were never required under the old rules either.  It was just that most people doing drawdown used IFAs.

Sarahspangles

If anyone wanted to let Citizens Advice know there’s an issue with their web content there’s a link at the bottom of the page. https://www.citizensadvice.org.uk/debt-and-money/pensions/nearing-retirement/pensions-income-drawdown/

squirrelpie

Sarahspangles said:

If anyone wanted to let Citizens Advice know there’s an issue with their web content there’s a link at the bottom of the page. https://www.citizensadvice.org.uk/debt-and-money/pensions/nearing-retirement/pensions-income-drawdown/

I already did. I'll report back if they answer.

Gudrun

Thank you all so much for your great advice!   I'd spent a long time trying to track down this apparent HMRC rule.   And thank you squirrelpie for informing Citizens Advice about this.