Switch from capped to flexi-access drawdown

One of the ways investors accessed their SIPP before April 2015 was through a type of drawdown called capped drawdown. If you are in capped drawdown you have a maximum level of income that you can take from your pension each year - the GAD (Government Actuary’s Department) limit. This is reviewed every three years up until you are 75 and annually after that.

If you are using capped drawdown to access your SIPP you have two options:

  1. Move to flexi-access drawdown
  2. Stay in capped drawdown

Please note that you can’t reverse the switch so you need to consider your options carefully.

To move to flexi-access drawdown just complete the capped to flexi access conversion form.

Why switch to flexi-access drawdown?

Benefits of switching Drawbacks of switching
  • Withdraw as much of your pension as you like
  • No charges for taking a one-off or regular pension payment
  • Switching is free, and you'll no longer need to pay for GAD reviews
  • The money purchase annual allowance applies when you take your first income payment, or flexibly access your pensions in any other way. This restricts the amount you can contribute to your SIPP and other money purchase pensions each tax year to £4,000. Read more about the money purchase annual allowance

In flexi-access drawdown you can take as much out of your pension fund as you like, but remember that it may not be tax efficient or sustainable to do so – you need to understand the level of tax that you will have to pay and make sure that you can support yourself in later life.

Staying in capped drawdown

You can choose to stay in capped drawdown and take up to the maximum level of income each year. You will benefit from potentially higher contribution limits and we will treat any further part of your SIPP put into drawdown as capped drawdown when you take income or lump sums.

Your review dates will remain the same. Each review is subject to a charge – see our SIPP charges

How to check if you are in capped drawdown

You can only be in capped drawdown if you started taking income from your pension on or before 5 April 2015. To check, log in to your account and choose 'Manage my SIPP'. Here you can view any drawdown pots you have – if you're in capped drawdown, you'll see ‘Next review date’ and ‘Current max income’.