FSA cracks down on drawdown from smaller funds

Income drawdown, in the form of both unsecured pension (USP) and alternatively secured pension (ASP), allows people to take a tax-free lump sum from their pension pot and receive an income from the rest. And although many in the industry believe income withdrawal is best suited to members with pensions in excess of £200,000, there has been a growing number of firms who are arranging drawdown on much smaller funds. The FSA describes this as a high-risk business, as people could end up with less income than expected in retirement, and points out the facility is only suitable for a limited...