What is flexi-access drawdown (FAD)?

If you have chosen to take a tax free or pension commencement lump sum from your SIPP, the remaining funds you have accessed will be used to provide you with a pension income.

If you do not choose to purchase an annuity to provide an income, these funds will be moved into income drawdown.

With flexi-access drawdown there is no minimum or maximum limit on the income you can take from the drawdown pot. If you are reliant on the income from your pension to support you, you should consider taking a level of income that is sustainable for your lifetime.

The income payments will be subject to income tax at your marginal rate. For more information see our taxation of pensions page.

Please note that we may need to tax these payments using the emergency code until we receive a tax code from HMRC which may mean that you pay more tax than you were expecting.

Any funds you choose not to take as income will remain invested in your drawdown pot within the tax free SIPP wrapper. These are often referred to as ‘crystallised funds’.

Once you take an income payment from your flexi-access drawdown pot, the amount you can contribute each year to your SIPP (and any other money purchase pensions) is restricted to £4,000 per annum. This is known as the money purchase annual allowance (MPAA). For more information see our pension contribution rules page.


Mark has a SIPP valued at £100,000 which he has not used to provide him with any benefits. He has chosen to take his maximum tax free lump sum of £25,000, leaving him with £75,000 which he can use to provide himself with an income.

Mark chooses not to purchase an annuity, so £75,000 will be moved into a flexi-access drawdown pot, and he will be able to take income from the drawdown pot without limit.

Any income payments Mark chooses to take from his crystallised funds will be subject to tax at his marginal rate.