What are the advantages of pension drawdown?

What are the advantages of pension drawdown?

Flexibility: Unlike an annuity, any remaining funds can be passed to your spouse, children or any other beneficiaries upon your death. 
 
Tax Efficiency: The generous taxation relief during the accumulation phase of your retirement fund, as well as the fact that retirement funds are outside of the estate for inheritance tax purposes (and therefore not liable to inheritance levies except in exceptional circumstances), has led to pensions largely being seen as one of the most tax efficient methods of saving and investing.

What are the disadvantages of pension drawdown?

We are committed to our role as independent consultants, and we will always base our advice on your personal circumstances. Opting to take income via drawdown from your retirement fund is not in everybody’s interest, and if it is not suitable for you then we will tell you and steer you towards options that are more appropriate.
 
Limited Funds: An annuity is guaranteed for your lifetime but pension income drawdown is not. The funds can run out if too much money is withdrawn. For this reason small retirement pots are not suitable for pension drawdown.
 
Investment Risk Whilst our expert team will carefully manage your investment portfolio, the funds are essentially still tied to the performance of the markets. These can go down as well as up, so if you are not comfortable with an element of managed risk then an annuity would be a much safer option for you.