What is Phased Drawdown (Retirement Planning Strategy)?

Full Definition

Phased drawdown is a retirement income strategy that involves partially crystallising -- converting from uncrystallised to crystallised -- portions of a pension pot incrementally over several years rather than all at once. Each partial crystallisation triggers its own 25% Pension Commencement Lump Sum (PCLS) up to the Lump Sum Allowance (GBP 268,275 for 2026/27 across all crystallisations), with the remaining 75% entering flexible access drawdown (FAD). By drawing only what is needed each year and leaving the rest uncrystallised, the retiree can keep taxable income within lower tax bands -- potentially staying within the basic rate band (up to GBP 50,270 in 2026/27) or even within the Personal Allowance (GBP 12,570). This approach also defers the trigger of the Money Purchase Annual Allowance (MPAA): the MPAA (GBP 10,000 in 2026/27) is triggered only when FAD is first accessed, so deferring crystallisation preserves the full GBP 60,000 annual allowance for continued pension saving. Phased drawdown should be distinguished from Uncrystallised Fund Pension Lump Sums (UFPLS), which always trigger the MPAA. The strategy is particularly effective when combined with State Pension deferral and ISA bridging. Tax projections should be reviewed annually as allowances and rates change.

Related Calculators

See Also