Answers · UK 2025/26
What is capped drawdown and can I still use it?
Capped drawdown was the pre-April 2015 form of pension drawdown, limiting annual withdrawals to a set percentage of an equivalent annuity (recalculated periodically by the Government Actuary's Department). It closed to new entrants in April 2015 when flexi-access drawdown was introduced, but people who already held a capped drawdown plan before that date can generally continue it.
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Capped drawdown was the standard form of income drawdown available before the April 2015 Pension Freedoms reforms, and it worked very differently from the flexi-access drawdown that replaced it. **How capped drawdown worked** Under capped drawdown, the maximum annual income you could withdraw from your crystallised pension fund was limited to 150% of the "basis amount" -- broadly, the income a person of your age could get from a single-life annuity with no guarantee period, as calculated using Government Actuary's Department (GAD) tables. This cap was reviewed and recalculated every three years (or annually from age 75), and was designed to stop people rapidly depleting their pension fund and then falling back on means-tested state benefits. **Why it closed** From 6 April 2015, capped drawdown closed to new entrants. Anyone starting drawdown from that date onwards uses flexi-access drawdown instead, which has no maximum withdrawal limit at all. **Can you still use an existing capped drawdown plan?** Yes -- if you already had a capped drawdown arrangement in place before 6 April 2015, you can generally continue to take income within the GAD-calculated cap indefinitely. You are not automatically forced to convert to flexi-access drawdown. **Why some people keep capped drawdown rather than converting** The main reason to stay in capped drawdown rather than voluntarily converting to flexi-access drawdown is the Money Purchase Annual Allowance (MPAA). Taking income within the capped drawdown limit does NOT trigger the MPAA, so you can continue making pension contributions up to the full £60,000 annual allowance (with carry-forward) while still drawing income. As soon as you exceed the capped drawdown limit even by £1, or voluntarily convert to flexi-access drawdown, the MPAA of £10,000 is triggered and cannot be undone. **Worked example** David, 68, has held capped drawdown since 2013 with a GAD-calculated cap of £18,000/year. He takes exactly £17,500/year in income -- staying within the cap -- and continues to contribute £15,000/year to a separate pension, using the full £60,000 annual allowance without triggering the MPAA. If he took £18,500 (exceeding the cap) even once, the MPAA would apply from that point onwards, capping his future contributions at £10,000/year. **Practical takeaway** If you hold a legacy capped drawdown plan and still want to make significant pension contributions, get regulated financial advice before increasing withdrawals above the GAD cap or converting to flexi-access drawdown, since the MPAA trigger is permanent and cannot be reversed.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.