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Income Drawdown on Death

Income Drawdown on Death

One of the major drawbacks with annuities is that the Annuity Provider keeps your capital on your death. The rules applying to Income Drawdown are very different and now allow your spouse/beneficiaries to access the capital tax-free if you die before age 75, and subject to income tax if you die post-75.

Income Drawdown on Death

If you die before Age 75, and are in an Income Drawdown Plan, then the following options currently apply:

  1. Your spouse/beneficiaries can take the fund entirely tax-free, either as a lump sum or by drawing an ongoing, regular income from the fund.
  2. Your spouse can buy an annuity with the residual fund.

It is widely expected that Drawdown Rules will continue to be amended to allow more flexibility when drawing pension income.

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