Flexi-Access Drawdown is a Pension Drawdown used to flexibly access pension benefits. You can choose to take up to 25% (a quarter) of your pension pot as a tax-free lump sum. You then move the rest into one or more funds that allow you to take a taxable income at times to suit you. Typically, people use it to take a regular income.
You choose funds to invest in that match your objectives and attitude to risk and set the income you want. The income you receive may be adjusted periodically depending on the performance of your investments.
Once you’ve taken your tax-free lump sum you can start taking the income right away or wait until a later date.
You can also move your pension pot gradually into income drawdown. You can take up to a quarter of each amount you move from your pot tax-free and place the rest into income drawdown.
With Drawdown, you retain the flexibility to use all or part of the funds to buy an annuity or other type of retirement income product that may offer guarantees about growth and/or income.
Flexible Drawdown is an older form of Flexi-Access Drawdown which was the privilege of the very wealthy who could justify extensive means. The Pension Freedoms have now made this flexibility available to all and most "Flexible Drawdown" plans have been renamed "Flexi-Access Drawdown". Like Flexible Drawdown, Flexi-Access gives you the freedom to take income from your pension savings without a cap or limit. This could be all at once, as one-off small amounts, or as regular withdrawals.
The tax implications are the same as for Flexible Drawdown. In other words, once you have taken the tax-free cash amount (typically 25%), the rest of the money you take is subject to income tax in the same way as any other income; the more you receive, the higher the tax.
If you are aged under 75, you will be able to pay up to £4,000 a year into money purchase pensions, an option that has not been available to you since you started using Flexible Drawdown.