Is SIPP Income Drawdown An Option You Should Make Use Of?

Time has gone when pensioners would stay happy for years and years after buying a pension plan. In the current of uncertain financial states of a person as well the fluctuating annuity rates one has to keep reconsidering his options every once in a while. However, when one wants to take benefits from his personal pension, there aren’t a lot of options to choose from.

One can however, take his tax-free cash sum (almost always a 25% of the pensioner’s fund) and with the rest of it buy an annuity from the current provider. The pensioner can also shop around to find the right kind of annuity from whichever annuity plan provider that is quoting the best and most competitive annuity rates in the market.

A SIPP income drawdown is different from the annuity because with an annuity, one’s fund given to the insurance company will get him a guaranteed income. On the other hand, SIPP drawdown option pays the pensioner his income while keeping hold of his funds. There is no ambiguity when it comes to the differentiation between a regular annuity and a SIP drawdown which is why it is not difficult to choose between the two.

Income drawdown is a great option for a huge number of pensioners specially the ones who are in the following circumstances:

  • Such individuals whose situations change and might, for example, want to take maximum pension in a year but nothing in the next.
  • As an interim measure, allowing immediate income without obligation to an annuity.
  • Those individuals who have the understanding of how funds are managed in order to manage their own funds in an active manner.
  • Those individuals who can afford to take a calculated risk in place of a dull certainty.

Thus, income drawdown is a very useful option for many people and for this reason everyone should try figuring out if they should take this option. SIPP drawdown can certainly bring profits to the pensioners in the near future if everything goes according to the plan.


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