Review your drawdown pension

If you’re using drawdown, it needs to be looked at on a regular basis.

Why do you need to review your drawdown pension?

If you are using drawdown to provide a regular income it can be complex to look after, which means you have the responsibility to review it regularly to help make sure it provides you with a regular income throughout your retirement.


How often do you need to review it?

Just like servicing a car, regularly reviewing your drawdown pension is important, particularly if you are using it to provide an income.

It’s good practice to look at it at least annually. Your drawdown provider will send you a valuation at least once a year, which might be a good reminder to take some action if necessary.

If, in between this annual review, your circumstances significantly change, or you plan to change how much you take out, then you should review things again.


What should you review?


Your investment funds

For drawdown to work properly you generally need to take some investment risk, usually based on funds invested in stocks and shares.

The investment risk taken is with the aim of generating a return allowing the money in drawdown to last longer. However, you need to be comfortable with the level of risk you are taking.

The value of your plan can rise and fall not just because of how your investment has performed, but also due to any charges and how much you have taken out.

If, having reviewed your investments, you have any concerns about the performance of your fund(s), you should think carefully before making any decisions. If you are unsure, we would recommend that you seek financial advice.


How much you are taking out?

The value of your drawdown plan can be affected not only by the potential investment return and the charges, but also by the amount of money you have taken out either as a regular income or as lump sums.

There are no restrictions on how much money you can take out, which makes it very flexible, but you could run the risk of taking too much and possibly running out of money during retirement.

If you are concerned that your fund may run out, or is reducing faster than you expected, you may want to consider reducing the amount you take.

You could consider limiting the amount you take each year. As a rule of thumb, a 65-year-old should take a maximum of between 3-4% of the value of their initial drawdown investment each year. Limiting the amount you take out could help reduce the risk of running out of money during retirement.


Should you consider buying an annuity?

If you are concerned with your drawdown investment lasting for the whole of your retirement, you can buy an annuity at any time.

Although less flexible than drawdown, an annuity will not run out, and will provide you with a guaranteed income for the rest of your life.

The rates offered for annuities increase with age and can account for any declining health. This may mean the older you are when you purchase an annuity the higher the level of income from an annuity can become.

You should consider your options carefully and if unsure you should seek financial advice before making any decisions.

Pension freedom

You now have more choices when it comes to taking your pensions and retirement income.

Find out more

Online services

Scottish Widows customers can log in or register to use online services, such as:

  • Check policy values
  • Change address
  • Request statements
Log in or register

Check pension fund prices

At Scottish Widows we update our fund prices every working day. Check for prices, charges updates and more.

View fund prices