Advantages and disadvantages of drawdown pensions

Pension drawdown

Advantages

  • You will have control over your savings and how they are invested
  • You can manage your money with the aim of generating further growth or to beat the effects of inflation
  • You can make changes to the income you receive
  • You will be able to pass any remaining funds in your pension pot on to your next of kin

Disadvantages

  • Pension drawdown income is not guaranteed and there is a risk that you may run out of money in retirement
  • If your investments perform poorly you may need to reduce the income you take
  • You will need to regularly review your investments to ensure you are still on track
  • If you plan to buy an annuity later in life, annuity rates may be lower than they are currently

This information is not a personal recommendation for any particular investment, you are responsible for deciding whether an investment is suitable for you. In doing so, please remember that past performance is not a guide to future performance, the performance of funds is not guaranteed and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser. © FIL Limited 2021