Flexi-access drawdown | Help and support

How does flexi-access drawdown work with The People’s Pension?

Amanda Fletcher — Mon, 31 Jan 2022 13:47:55 +0000

To access your pension savings via flexi-access drawdown, you must be 55 or over and have a minimum pension pot of £10,000 (or £2,000 if you’ve already taken money before).

With this option you can usually take up to 25% tax-free cash up front either in chunks or in one go. Under HMRC rules, for every £1 you take as tax-free cash, £3 will be moved to a flexi-access drawdown account that we set up for you. Then, each time you take money out of your flexi-access drawdown account, you may pay income tax on the full amount of each lump sum. With flexi-access drawdown your money purchase annual allowance (MPAA) isn’t triggered when you take the initial 25% tax-free cash, it’s only triggered once you take your first withdrawal from your flexi-access drawdown account.

You can take one lump sum a tax month. For example, from 6 May to 5 June. We don’t charge you for taking lump sums.

If you’re still going to be working after you start taking money from your pension pot, you might want to continue saving into a pension to make the most of your employer’s contributions. Or even if you’re not going to be working, you might want to continue making your own contributions.

Any future contributions will go into your current pension pot with The People’s Pension, so it’ll be separate from your money in your flexi-access drawdown account – you’ll be able to keep an eye on both balances through your online account. All of your savings, including monies held in flexi-access drawdown, will be taken into consideration when calculating your rebate on your management charge.

Find out more about taking your tax-free cash up front with The People’s Pension

Where will my pension savings be invested whilst in flexi-access drawdown?

Niki Smith — Mon, 17 Jul 2017 11:00:59 +0000

We’ll use your selected retirement age and the same investment choice you made for your pension while building your pension pot for your flexi-access drawdown account.

If you’ve invested in multiple funds – each time you make a withdrawal, we’ll reduce how much money you have in each fund proportionately.

For example, if you decide to withdraw £2,000 from your pension savings and the value of your pension savings was split between 3 different funds (£65,000 ‘adventurous’, £25,000 ‘balanced’ and £10,000 Cash) – £1,300 (65%) of your withdrawal would come from the ‘adventurous’ fund; £500 (25%) from the ‘balanced’ fund; and £200 (10%) from the Cash fund.

You can find out more on our website about:

Can I transfer my other pension savings into flexi-access drawdown with The People’s Pension?

Niki Smith — Mon, 17 Jul 2017 11:00:50 +0000

You can transfer your other pension savings into The People’s Pension to be used for flexi-access drawdown if they are uncrystallised funds. This is where no money has been taken from the pension scheme. If your funds have been crystallised and you’ve already accessed your pension savings, we won’t be able to accept the transfer.

Find out more about taking your pension a bit at a time through flexi-access drawdown

How many lump sums can I take from my flexi-access drawdown account?

Niki Smith — Mon, 17 Jul 2017 11:00:43 +0000

You can take one lump sum a tax month from your flexi-access drawdown account. For example, from 6 May to 5 June. We don’t charge you for taking lump sums.

Find out more about taking your tax-free cash up front with The People’s Pension

How much money can I take at a time from my flexi-access drawdown account?

Niki Smith — Mon, 17 Jul 2017 11:00:39 +0000

You must take a minimum of £200 each time you take a lump sum from your flexi-access drawdown account with The People’s Pension – you can’t take less than £200 at a time. If you have less than £200 you can take the rest of your pension savings as a final lump sum.

Find out more about taking your tax-free cash up front with The People’s Pension

What is flexi-access drawdown?

Niki Smith — Mon, 17 Jul 2017 11:00:24 +0000

Flexi-access drawdown allows you to use your pension pot to provide flexible withdrawals. Using flexi-access drawdown you can usually take up to 25% tax-free cash up front either a bit at a time or in one lump sum. Under HMRC rules, for every £1 you take as tax-free cash, £3 is moved to a flexi-access drawdown account that we set up for you. Then each time you take money out of that account you may pay tax on the full amount of each lump sum.

Find out more about taking your tax-free cash up front with flexi-access drawdown

How do I access my flexi-access drawdown account?

Niki Smith — Mon, 17 Jul 2017 11:00:23 +0000

Once we’ve set up your flexi-access drawdown account, following your first withdrawal, you’ll be able to log in to your account online to check your balance and request further withdrawals.

You can find out more on our website about:

What tax will I pay if I use my pension savings for flexi-access drawdown?

Niki Smith — Mon, 17 Jul 2017 11:00:22 +0000

Using flexi-access drawdown you usually take up to 25% tax-free cash up front either a bit at a time or in one lump sum. Under HMRC rules, for every £1 you take as tax-free cash, £3 moves to a flexi-access drawdown account. Each time you take money out of that account you’ll pay tax on the full amount of each lump sum at the highest rate you pay.

If HM Revenue & Customs (HMRC) hasn’t supplied us with your tax code for the current tax year, your withdrawal will be taxed using a temporary (emergency) rate. In most cases, this will mean that too much tax will be deducted and you’ll have to reclaim the overpayment from HMRC.

What are the differences between FAD and UFPLS?

Beth Lamport — Mon, 17 Jul 2017 11:00:01 +0000

Both flexi-access drawdown (FAD) and uncrystallised funds pension lump sum (UFPLS) are ways of taking your pension pot a bit at a time. The main difference is when you take your tax-free cash.

Taking your tax-free cash up front – flexi-access drawdown

Using flexi-access drawdown you take 25% tax-free cash up front either a bit at a time or in one go. Under HMRC rules, for every £1 you take as tax-free cash, £3 moves to a flexi-access drawdown account.

Then, each time you take money out of your flexi-access drawdown account, you may pay tax on the full amount of each lump sum. Once you start taking money from your flexi-access drawdown account your money purchase annual allowance (MPAA) is triggered. At any time, you can choose to use any remaining money in your flexi-access drawdown account to buy an annuity, or transfer it to another flexi-access drawdown provider.

Spreading your tax-free cash across all withdrawals – UFPLS (uncrystallised funds pension lump sum)

The second way to take your pension pot a bit at a time is to spread your tax-free cash across all withdrawals.

So each time you take money from your pension pot, 25% of it is tax-free and you may pay tax on the other 75% of each lump sum. When taking your pension savings in this way your money purchase annual allowance (MPAA) is triggered the first time you make a withdrawal. At any time you can choose to take a different retirement option with any remaining money in your pension pot or transfer it to another provider.

Making a decision

These options will work differently for different people, depending on a whole range of circumstances and factors. We can’t tell you which option is best for you. That’s why we always recommend you get guidance and advice as well as doing your own research.

To find out more about each of these options, take a look at our webpage about taking your pension savings a bit at a time.

When you’ve decided and you’re ready, find out how to take your pension money.