Railway Employees
Drawdown / Income release
Advantages
Access to tax-free cash immediately- Flexibility to vary your income according to your requirements
- Control the level of income tax you pay
- Control of your investment
- Funds benefit from investment growth in a tax-efficient environment
- Choice not to purchase an annuity
- Option to take unlimited amounts if you meet certain income requirements
- Choice of death benefits for partner / children or your estate
Disadvantages
- Future investment returns are not guaranteed
- High withdrawals of income may not be sustainable
- The higher the level of income withdrawal chosen the less that may be available to provide for dependants
- Increased flexibility brings increased administration costs. The level of income may change due to the reviews
Inheritability / Death Benefit
In the event of your death whilst in a Pension Drawdown plan, the value of the pension fund can be used to provide your dependents with a cash sum, a lifetime annuity or they can continue to receive income from their own Pension Drawdown plan set up with the value of your fund. You can also leave the fund to beneficiaries who are not your dependents in the form of a lump sum subject to a HMRC recovery charge of 55%
Advice is a necessity!
Drawdown is an area where you need to take independent financial advice. There can be many pitfalls and drawbacks including financial penalties, paying excess income tax or loss of death in service. In some cases your long term retirement plan may be affected e.g. your pension could be reduced by accessing it early. Contact us