Moneyfarm’s Pension Drawdown Service

Our free Pension Drawdown Service helps you make confident, stress free decisions to stay in control of your retirement income.

Your capital is at risk. Investments can go down as well as up and you may get back less than you originally invested. Read more on understanding the risks
SIPP

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What is drawdown?

Pension Drawdown is a flexible option for accessing your pension in retirement. You can withdraw lump sums, generate a steady income or do both, as and when you choose.

You can typically withdraw up to 25% of your pension pot tax-free, whilst leaving the rest invested. This means your pension can continue to grow over time. As with all investments, there is a chance that your pension could fall in value.

Moneyfarm’s drawdown service allows you to access your pension anytime after the age of 55.

Why choose Moneyfarm’s Pension Drawdown Service?

Free Drawdown

Pay no additional fees for accessing your pension in retirement

Tax Efficient

Withdraw up to 25% of your pension tax-free and minimise tax liabilities

Flexible Withdrawals

Access your pension savings, how and when you need

Human guidance

Cut through the jargon by speaking with one of our Investment Consultants

Hassle-free Access

Let us handle everything, from withdrawals to relevant tax payments

Inheritance Tax benefits

Pass on pension funds to your beneficiaries free of inheritance tax

How does drawdown work?

Combine old pensions

Open a Moneyfarm Pension, and invest a lump-sum, set up a direct debit or transfer your old pensions for free

Plan for retirement

Think about how much you’ll need in retirement, the amount you want to access and how frequently

Understand your options

Speak with an Investment Consultant who will explain your options and guide you through the process

Enjoy your retirement

Sit back and relax – Moneyfarm will handle the rest

Moneyfarm’s Pension Drawdown options

Pension Commencement
Lump Sum (PCLS)

Tax-free Lump Sum withdrawal(s)
  • Withdraw up to 25% of your pension pot tax-free, either as a single lump sum or in instalments
  • Does not trigger your money purchase annual allowance, which restricts how much you can save in your pension each year
  • Leave your remaining pension funds invested to grow

Flexi-Access
Income Drawdown

Adjustable Income
  • Access your pension funds as taxable income, in monthly, quarterly or annual instalments
  • Adjust the amount and schedule of your income payments, as required
  • Combine this option with a tax-free lump sum withdrawal (PCLS)
  • Leave your remaining pension funds invested to grow

Uncrystallised Funds Pension
Lump Sum (UFPLS)

Ad-hoc Lump Sum withdrawal(s)
  • Withdraw single or multiple lump sums, as and when you choose
  • You can usually take 25% of each withdrawal tax-free
  • Leave your remaining pension funds invested to grow
  • With the exception of your 25% tax-free amount, all withdrawals are subject to your marginal rate of income tax.
  • Accessing the taxable portion of your pension will trigger your Money Purchase Annual Allowance (MPAA), lowering your annual allowance for pension contributions to £4,000.
  • You can carry on saving into your pension and benefit from the 25% government top-up to the age of 75.
  • The tax implications of each drawdown option differ, so it is important that you factor these into your retirement planning. Please contact an independent financial adviser if you’re unsure.
  • The value of your pension is not guaranteed. The value of your pension could be lower than initially illustrated if you withdraw large amounts, stop/reduce your contributions, or if the investments held perform worse than expected.
  • When transferring from another pension provider, Moneyfarm may not be able to match the benefits you are currently offered.

Moneyfarm’s free drawdown service

Our drawdown service is free. This means:

  • No additional charge to enter drawdown
  • No additional administration charges
  • No withdrawal charges
  • No fund switching charges

During drawdown, you will continue to pay the same standard pension management charge as before. Click here for Pension fee details.

Calculate your retirement income with Moneyfarm’s Pension calculator

The inheritance tax benefits of pension drawdown

With Moneyfarm’s Pension, funds left in your pension wrapper can usually be passed on free of inheritance tax. Some consider this to be a key advantage of drawdown over most standard annuities.

With drawdown, your beneficiaries can keep the flexibility associated with your pension pot. This means they have the option to withdraw as a lump sum, remain in drawdown or purchase an annuity.

The tax treatment of your assets will depend on when you pass away.

Under 75 years old – Beneficiaries will usually receive payments free of tax. They will have to claim within two years, after which they may be taxed

Over 75 years old – Beneficiaries will receive payments as income and be taxed accordingly

Pension Drawdown – Tax Considerations

Moneyfarm leaves you with more time to enjoy your retirement by handling the payment of any relevant taxes for you.

When you access your pension as taxable income, any withdrawal beyond your tax-free personal allowance will be subject to income tax. No National Insurance will be due on your pension income.

To determine your tax rate, your taxable pension income will be added to any other relevant income you receive in that particular tax year. You can find full details on what counts as relevant income on the HMRC Website.

Moneyfarm handles your payment of relevant taxes, leaving you with more time to enjoy retirement
  • Tax charges will apply if you exceed your lifetime allowance.
  • Large withdrawals may move you into a higher tax band. You could consider spreading your withdrawals over different tax years to take advantage of personal allowances and income tax bands.
  • Tax rules can change and your benefit entitlement depends on your personal circumstances.
  • It is important to ensure that your tax code is up to date with HMRC before you make a withdrawal to avoid any additional tax being applied

Crystallised, Uncrystallised and the Lifetime Allowance explained

Typically, each time you access your pension savings, you trigger a Benefit Crystallisation Event (BCE).

This results in the value of the crystallised funds (the funds you have accessed) being tested against your Lifetime Allowance of £1.055 million. The pension funds you have not accessed are called uncrystallised funds, which have not yet been tested against your lifetime allowance.

If your total pension savings exceed the lifetime allowance when you decide to take benefits or a benefit crystallisation event, a tax charge applies, called the lifetime allowance charge.

Other Benefit Crystallisation Events listed by HMRC include reaching the age of 75, transferring to a qualifying recognised overseas pension scheme, and passing away. You may experience a number of these events in your lifetime.

Drawdown

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