Glossary · UK
What is Pension Drawdown?
Keeping a pension invested and withdrawing flexibly in retirement.
Full Definition
Flexi-Access Drawdown (FAD) lets you keep your defined contribution pension invested in retirement and withdraw amounts as needed. Take 25% tax-free (up to LSA £268,275), the rest taxed at marginal rate. The «4% rule» suggests withdrawing 4% of starting pot annually (rising with inflation) for ~30 years. Risks: sequence-of-returns (early market crash hurts), outliving pot. Benefits: flexibility, growth potential, passes to beneficiaries (IHT-free until April 2027). Triggering drawdown beyond 25% activates MPAA £10k.
Related Calculators
Read More
See Also
Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.