PSI25.2.5 - Flexibility in Pension Provision – Annuity Deferral/Income Drawdown - Varying the Amount of Pension under Income Drawdown

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

The member/survivor may vary the amounts drawn down from year to year if they so wish. The chosen amount of income to be paid through a drawdown arrangement should be paid for a period of not less than one year unless a review occurs within any particular year which would entail the commencement of a new 3 year cycle - see PSI25.2.8. In the absence of a review, income cannot be varied within a year. For example, it would not be acceptable for 6 months worth of 100% income to be drawn with the following 6 months being based on income at 35%

The onus is on scheme administrators to ensure year by year that actual and/or amount of the withdrawals remain within the limits.

Once started, the pension in the form of income drawdown must not be stopped until the member's/survivor's death or until the whole of the member's/survivor's fund is utilised for annuity purchase (or until the survivor ceases to be eligible to receive a pension under the scheme rules). The amounts withdrawn under income drawdown will be subject to PAYE in the same way as annuity instalments.