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John’s Case Study – Flexi-Access Drawdown

John is 56 and has several pension funds and a good amount of savings. With this fund of £100,000, John opts to first take his full allowance of tax free cash, £25,000, as he wants to pay off his mortgage. He doesn’t require an income today as he is still working and given that he is comfortable with risk and can tolerate a potential loss, he puts the remainder into a Flexi-Access Drawdown and invests into funds with a medium risk profile.

He plans to reduce his working hours in the future and wants the flexibility to alter his pension income to ‘bridge’ this gap with a view to taking a safe, secure income when he retires completely. Let’s take a look at John’s Journey through Flexi-Access Drawdown, starting with £100,000:

AgeProjected Amount in DrawdownJohn chooses to…Risk ProfileHow much is in Drawdown?
56£100,000Take £25,000 Tax-Free CashMedium£75,000
61£91,900*Take £5000 Lump SumMedium£86,100
63£97,600Take a regular income of £2620 for three years.Medium£99,640
66Retire completely and revisit his options with his £99,640

The ongoing costs for John’s Flexi-Access Drawdown would be:

Ongoing advice and reviewPlatform feeFund charges

*Assuming an average 4.9% yearly growth before charges.

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