With income drawdown your pension fund remains invested and after taking any tax free cash you require up to a maximum of 25% of the fund value, you can draw an income from this fund. The income that can be taken is anything from £0 to 120% of the Government Actuaries Department (GAD) rate for your age and gender.
In its emergency Budget, the new Government announced its intention to “end the effective requirement to use a pension fund to buy an annuity by age 75, with effect from 2011-12”. Unfortunately, that is just about all it has said. It has introduced a temporary arrangement for those approaching age 75 by increasing the age by which an annuity must be purchased to 77, and has confirmed that anyone dying after 22 June and over the age of 75 will be subject to the USP death benefit rules, rather than the far more penal ASP regime. However, rather confusingly, it appears that it is still necessary to elect to take any tax-free cash by age 75.
Income Drawdown Calculator
To find out how much income you can drawdown under the GAD rules from your income drawdown plan you should use an income drawdown calculator. The maximum level of income can be quickly found by using the income drawdown calculator.