A pension that is paid as income withdrawal from a scheme as an alternative to purchasing a lifetime annuity or receiving a scheme pension. From 6 April 2015 only those who had already allocated funds to provide capped drawdown before that date can take further capped drawdown benefits.
The amount of pension that can be drawn down via capped drawdown is between 0% and 150% of the amount of annuity that could be provided using the Government Actuary’s Department’s annuity rate applicable for the member at the time they take benefits. The level of capped drawdown must be reviewed at least every three years and annually after age 75.
If the permitted maximum pension is exceeded in any pension year the funds will automatically be deemed to have converted into flexi-access drawdown.