Comparison · 2026/27
Capped Drawdown vs Flexi-Access Drawdown
If you have a pre-2015 capped drawdown pension, staying within its income cap avoids triggering the Money Purchase Annual Allowance — but converting to flexi-access drawdown removes the income limit entirely. This guide compares the two and explains the conversion trade-off.
At a Glance
| Feature | Capped Drawdown | Flexi-Access Drawdown |
|---|---|---|
| Available for new arrangements? | No — closed since April 2015 | Yes — standard route |
| Income limit | GAD-based cap, reviewed periodically | None — unlimited withdrawals |
| Triggers MPAA within limit? | No | Yes — on first taxable withdrawal |
| Tax-free cash | Normally 25% at crystallisation | Normally 25% at crystallisation |
| Best suited to | Still contributing to pensions, income needs within cap | Needs flexible or higher withdrawals |
Money Purchase Annual Allowance shown is £10,000 for 2026/27; standard Annual Allowance £60,000; Lump Sum Allowance £268,275. Confirm current figures on gov.uk.
How Capped Drawdown Works
Capped drawdown arrangements set up before April 2015 restrict annual withdrawals to a maximum income limit, calculated using Government Actuary\'s Department tables based on your age, fund value and prevailing interest rate assumptions. This limit is reassessed periodically, so the maximum income available can rise or fall over time even without converting the arrangement.
Provided withdrawals stay within the calculated cap, capped drawdown does not trigger the Money Purchase Annual Allowance — a significant advantage for anyone who wants to continue making substantial tax-relieved pension contributions elsewhere while also drawing an income from this pot.
How Flexi-Access Drawdown Works
Flexi-access drawdown removes the income cap entirely, letting you withdraw as much or as little as you like from your crystallised pension fund each year, including reducing income to zero in some years. This is the standard drawdown route for anyone accessing a pension flexibly since April 2015.
Taking any taxable income from a flexi-access drawdown fund (beyond the initial tax-free lump sum) triggers the Money Purchase Annual Allowance immediately, reducing future tax-relieved pension contributions to £10,000 a year (2026/27) — a key trade-off against the greater flexibility on offer.