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Flexible income, also known as Drawdown

If you're 55 or older, you can access up to 25% tax-free cash from your pension pot and invest the rest

What is Pension Drawdown?

Pension drawdown is a way to take income from your pension pot after you reach age 55 (age 57 from April 2028). You access up to 25% cash tax-free and keep the rest in your pot invested until you need it.

As a Legal & General Stakeholder Pension customer you can move your funds into a Pension Drawdown so you can have easy access to a flexible income in your retirement.

If you're 50 or over, you should consider having a free Pension Wise appointment, before you decide how to access your pension.

As with all investments your funds can go down in value as well as up and you may get back less than you've paid in.

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Is Pension Drawdown right for me?

Digital first

It’s quick and easy to apply for Pension Drawdown online and then manage your account digitally through My Account.

Stay invested

Your Pension Drawdown funds will stay invested meaning they have the opportunity to carry on growing. Funds can go down as well as up.

Flexible withdrawals

You can take up to 25% tax-free cash and then have the flexibility to dip into the remainder of your pension when it suits you.

Pension Drawdown calculator

Our Pension Drawdown calculator helps you see how much income you could receive with pension drawdown, and allows you to compare this with the income you could receive from a pension annuity. You don't need to include any final salary pensions or your state pension.

I am
years old.
I have
£
saved in my pension pots.
I have
of my 25% tax-free cash.

Three steps to Drawdown

Step one

Move your existing pension pot into Drawdown

Step two

Take your 25% tax-free cash

Step three

Access your remaining pot when you need it

  • The income you draw down is taxable
    Any income you take will be subject to income tax. The amount of tax you pay on income from your plan will depend on your circumstances, and may change in the future. A reduced Annual Allowance will apply once you start to take an income from your pension (but won't apply if you're just taking tax-free cash).

  • Your state benefits could be affected
    This plan could affect your entitlement to any means tested state benefits.

  • The value of your pension pot is not guaranteed
    The value of your pension pot isn’t guaranteed and will depend on several things such as how much you pay in and when you choose to take your money. It’s also important to note the value of your pension pot can go down as well as up. Further details on the potential risks can be found in the Key Features Document.

  • You may run out of money
    You should regularly review the amount you are withdrawing. Because your income isn’t guaranteed, if your investment returns do not meet your expectations, if you live longer than expected or if you take too much money out too quickly then you could run out of money.

  • There are some costs involved
    There are charges for managing your account and charges applied to the investments you hold. We have a service charge of 0.25% of the value of your Pension per year. There is also a Fund Management Charge which differs from fund to fund. More detail on charges can be found below and in the Key Features Document.

Investment pathways are a way for you to select the funds that you're investing in when you're in drawdown. You choose one of four objectives for what you would like to do with your money within the next five years and the objective you choose will be linked to an investment solution. When you choose your investment pathway, you won't be locked in and can change it at any time. There's also more detail on the objectives themselves within the application.

Objectives Investment Key Investor Information Document
I have no plans to touch my money in the next five years Multi-Index 5 Fund Download PDF
I plan to use my money to set up a guaranteed income (annuity) within the next five years Sterling Corporate Bond Index Fund Download PDF
I plan to start taking my money as a long-term income within the next five years Multi-Index 4 Fund Download PDF
I plan to take out all my money within the next five years Short Dated Sterling Corporate Bond Index Fund Download PDF

Ready to access your 25% tax free cash?

Transfer to Drawdown online today. Have your pension details and paperwork to hand to complete your application and get a personalised illustration.

Before applying for Pension Drawdown, make sure you read the documents below.

Key Features

Terms and Conditions

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Retirement income products compared

Guaranteed income (Pension Annuity)

Fixed Term Retirement Plan

Cash-Out Retirement Plan

Flexible income (Pension Drawdown)

Can it provide a regular pension income?

Yes

Yes

Yes

Yes

Can I choose a guaranteed income each month?

Yes

Yes

Yes

No

Is my income guaranteed to last my whole life?

Yes

No

No

No

Can I change how much I get?

No

No

No

Yes

Am I exposed to market movements, up or down?

No

No

No

Yes

Common Pension Drawdown questions

Drawdown is a flexible way to access your pension when you're aged 55 or over (57 from April 2028). You invest your lump sum to access when you want. You enjoy flexibility over how and when you withdraw the remaining money.

You’re responsible for managing your money through your retirement, so should feel comfortable with doing this.

If you’re looking to transfer only part of your pension into drawdown, this is not something we currently offer so this product may not be suitable for you. However, we can accept one pension pot that you’ve already taken tax-free cash from.

Before choosing pension drawdown, it's important to understand the main taxation rules:

All income or subsequent drawdowns will be subject to income tax.

This means that if you take large amounts out in a single tax year, you could end up paying a higher rate of tax than you would otherwise.

Alternatively, if you take the same amounts over a number of years, you could pay less tax.

For example, if you had £75,000, depending on how you take this, you may pay more or less tax.

If you take it all as cash in the first tax year, then assuming you have no other taxable income, the tax you will pay will be: 

  Amount taken Tax paid 
Tax year 2025/26 £75,000 £17,432
Total tax paid   £17,432

If you spread your drawdown over two tax years, then assuming you have no other taxable income, the tax you will pay will be: 

  Amount taken Tax paid 
Tax year 2024/25 £37,500 £4,986
Tax year 2025/26 £37,500 £4,986
Total tax paid   £9,972

The amount of tax you pay on your income from the plan will depend on your individual circumstances.

Any tax you need to pay will be deducted from your withdrawals by your pension provider before the withdrawal is paid to you, just like an employer deducts tax before paying you a salary or wage.

When you take your first withdrawal, you'll probably be taxed on an emergency tax code. If this results in you overpaying tax in that tax year, you should receive a refund after the end of the tax year, alternatively you may be able to claim it back directly from HMRC during the tax year.

Tax rules may change in the future and are subject to your individual circumstances.

From 1 June 2022, the Financial Conduct Authority now requires pensions providers to refer customers to Pension Wise guidance and explain the nature and purpose of this guidance, when they decide to access their pension savings.

Pension Wise from MoneyHelper is a free and impartial Government pension guidance service.

Your decision about which options to choose is likely to be influenced by many factors, such as how much income or cash you need now and in the future. You should also consider your personal circumstances and the impact that your choices may have on taxation, State Benefits, Annual Allowances and any dependants.

Choosing between pension drawdown and an annuity is an important decision. There are several key areas you should look at when making your decision, including whether you want a guaranteed income for the rest of your life, or whether you want a more flexible approach.

No, if you can't complete your application then you won't be able to save it for later. You'll need to re-start the application. If you're ready to apply, you'll need details of your current pension provider, estimated value of your pension pot, and policy number, as well as your National Insurance number.

Flexi-access drawdown was introduced in April 2015 and replaces what was previously called flexible pension drawdown. The main difference is that with flexi-access there is no requirement to have a minimum income from other sources.

All drawdown products are now designed to offer flexi-access drawdown.

Need some help?

There are different retirement income products to choose from and the rates they offer can vary. Shop around to make sure you get the best deal for your situation and use available guidance and advice services before you apply. Other providers may have more appropriate products or be able to offer a higher level of retirement income.

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Retirement guidance

Pension Wise from MoneyHelper

You can get guidance from the government's free and impartial service to help make your money and pension choices clearer.

The availability of appointments can vary between a few days and several weeks, so if you need guidance, it's a good idea to book an appointment slot now:

0800 138 3944

Monday to Friday 9am to 5pm.
Calls may be recorded and monitored.

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Speak with us

Our colleagues are always happy to answer your questions or help you apply for a quote.

0370 165 9406

Monday to Friday 9am to 5pm
Call charges will vary. We may record and monitor calls.

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Get financial advice

Financial advisers can give you professional advice for pension planning.

You usually need to pay for their service and in return they recommend how to make the most of your pension given your circumstances.

To find and compare financial advisers please visit their website below.