Drawdown from 6 April 2015
Drawdown from 6 April 2015

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Drawdown from 6 April 2015
  • What is drawdown?
  • When can a scheme offer drawdown?
  • Types of drawdown
  • Treatment of pre-6 April 2015 income withdrawal arrangements
  • Drawdown and the money purchase annual allowance
  • Drawdown and the lifetime allowance
  • Drawdown and the pension commencement lump sum (PCLS)
  • Drawdown and death benefits
  • Reporting requirements
  • more

THIS PRACTICE NOTE APPLIES IN RELATION TO MONEY PURCHASE ARRANGEMENTS FROM 6 APRIL 2015

On 6 April 2015, pension flexibilities were introduced to widen the retirement options available to DC members and other members with 'flexible benefits' (essentially money purchase and/or cash balance benefits). As part of the flexibilities introduced, drawdown became more widely available.

For more information on the pension flexibilities introduced on 6 April 2015, see Practice Note: Pension flexibilities—what is involved?

This Practice Note focuses on the legal regime applicable to drawdown arrangements created on and from 6 April 2015. It also considers the treatment of pre-April 2015 drawdown arrangements on and from that date.

For information on the legal regime that applied to drawdown arrangements before 6 April 2015, see Practice Note: Drawdown between 6 April 2011 and 5 April 2015.

What is drawdown?

The term ‘drawdown pension’ (sometimes referred to as 'flexible income') replaces the terms ‘unsecured pension’ and ‘alternatively secured pension’ which were used before 6 April 2011.

Drawdown pension refers to the pension payment process which permits members to choose for themselves the annual amount of pension they wish to receive from a pension arrangement. That amount can vary over time, thus avoiding the need to produce a lifetime annuity.

As the drawdown funds remain invested, the value of those funds may grow or fall. This means that,