Pension Drawdown Calculator

What should you be aware of when opting for pension drawdown?

Not all pension contracts provide the facility to draw an income without converting to an annuity. Therefore, there may be a cost to transfer your existing pension arrangement to a drawdown contract.

If you go ahead a with a drawdown pension then you will remain invested. There are downsides to this; charges will continue to be made by the pension provider; the value of your pension can fall. On the positive side, your pension fund could rise in value.

Taking income withdrawals from your pension during periods of falling investment returns will make it harder to recover losses if\when investments eventually recover (the money withdrawn can no longer provide a return).

As the time comes to buy an annuity you may find that annuity rates have changed - they could be higher or lower than current rates. It is true to say that you will be older and ought to benefit from a higher annuity rate but there is no guarantee that this will be the case.

If you die while drawing income from a pension then the fund value will be paid to your estate. In the case of an annuity income may cease unless there is a guarantee or joint life included.