How Does Draw Down Income Work?

When you retire you can normally choose to take up to 25% of your pension pot as a tax-free lump sum.  With the remaining 75% you have the option to use this to generate an income however you so wish.  Most will set this up to pay out a regular income, whereas others will prefer to take out adhoc sums as and when they require. The income you receive can be amended depending on the performance of your investments.  There are two main types of income drawdown provision, flexi-access drawdown  and capped drawdown.

The value of pensions and the income they produce can fall as well as rise, you may get back less than you invested.