There is no compulsion to take any benefits before age 75 but the vast majority of people will need to draw income before that age. If a person does not wish to take an annuity, benefits may be taken as 'unsecured income'. This is similar to the 'income drawdown' facility currently available.
From A-day, the rules for unsecured income before age 75 are:
| Example of unsecured income Ash, after taking his tax free lump sum on 6 April 2007 at age 60, has a pension fund valued at £350,000 from which he intends to take unsecured income. For that sum of money on the open market he could have purchased a single-life flat-rate annuity of £22,000 a year. Ash must take a minimum of £1 a year but no more than £26,400 a year (120% of £22,000) until 5 April 2012. Ash varies the income he takes each year within these limits and at 5 April 2012 the remaining fund is valued at £400,000. Ash is now 65 and the fund would be able to purchase a single-life flat-rate annuity of £28,000 a year for him on the open market. Until the income is next reviewed (no later than 5 April 2017) Ash may take income from the unsecured fund of between £1 a year and £33,600 a year (120% of £28,000). |