A quick guide

What is Income Withdrawal?
When you wish to draw a pension under a SIPP, you may choose to either:

• Purchase an annuity or, if you are under 75 years of age.

•  Defer annuity purchase and take income directly from your fund. This is known as Income Withdrawal.
  While the purchase of an annuity will provide you with the security of a guaranteed level of income, Income Withdrawal could provide you with much greater control and flexibility. For example, subject to HM Revenue & Customs rules:

• You can vary the level of income you receive to suit your circumstances.

• You can defer purchasing an annuity without also having to defer receiving an income. This gives you the opportunity to monitor annuity rates with a view to eventually purchasing an annuity on more favourable terms. Please note, however, that annuity rates can go down as well as up.
  
  

• For members of occupational schemes, pension benefits can only be paid when you retire. Under a SIPP, you may start making Income Withdrawals at any age between 50 and 75 without having to retire or stop working.* Subject to HM Revenue & Customs rules, you may be able to transfer benefits under your existing pension arrangements to a SIPP for Income Withdrawal purposes.
  

* HM Revenue & Customs will allow benefits to be taken prior to the age of 50 if the Member provides medical evidence to prove that he/she is incapable through illness or injury of carrying on their normal occupation.
OR
The Member is in a profession where it has been proved that individuals normally retire at an earlier age than 50. Members in certain professions are allowed to take Income Withdrawal prior to age 50. Their plan must be made up of contributions based solely on earnings from that particular profession. For sportsmen, this does not include earnings from sponsorship or coaching, for which a separate plan could be set up if required.