Pension Drawdown Calculator

by admin on March 22, 2010

If you are considering Pension Drawdown as an alternative to Annuity Purchase

Then this handy little pension drawdown calculator will help you decide.

Pension Drawdown Calculator

Firstly lets look at what Pension Drawdown is:

It is a facility that allows an individual aged between 55 and 75 to defer the purchase of their pension from an insurance company. An income is drawn from the fund, and the residual fund remains invested. The maximum income that may be drawn is 120% of the pension that could have been purchased calculated using Government Actuary rates. There is no minimum. The pension must be purchased at age 75.

What are the advantages of Pension Drawdown

The individual is able to choose to purchase the pension at the time when pension (annuity) rates are favourable. If investment growth is achieved on the residual funds together with the fact that annuity rates increase with age, a higher pension may ultimately be purchased than could have been secured at outset. Also, many individuals are reluctant to purchase a pension from an insurance company since the whole of the purchase price is not returned on death, whereas under income drawdown the residual fund can be returned (see next question).

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