Case study - Capped drawdown


• Mr Jenkins, 60

• £100,000 SSAS

 • Taking capped drawdown

Mr Jenkins has been taking income via capped drawdown for several years and is drawing £6,000 pa, below his maxima. Under the new rules from 6 April 2015 he can either continue taking capped drawdown, or move to flexi-access drawdown. He also retains the ability to purchase an annuity at any time. As Mr Jenkins is no longer working he is not in a position to make further contributions to his pension. Mr Jenkins does not presently need to increase his level of income so can continue in capped drawdown indefinitely. However, he decides to move to flexi-access drawdown because extra income could be paid when desired and the requirement to have reviews carried out every three years (and annually after age 75) would no longer apply. As he will not be making any contributions, the reduction in annual allowance will not affect him. Once Mr Jenkins has informed his scheme administrator that he wants to move to flexi-access drawdown he can increase his level of income whenever he likes (subject to marginal tax). 

If you have any questions about this subject, please speak to your financial adviser.