An income drawdown is an arrangement in which a member opts to access his/her retirement benefits as a regular income through an investment fund from which retirement benefits payments are drawn. The key features are as below:-
a) Flexibility – An individual member has flexibility as regards investment choice, frequency, timing and amount of income withdrawals.
b) Duration – The minimum drawdown period allowable is ten years from the date of commencement of the drawdown.
c) Withdraw-able Income – The member may withdraw an income from his/her drawdown fund subject to a maximum of 15% p.a. (“withdrawal percentage”) of the member’s outstanding account balance.
d) Investment Return – The remaining amount is invested and returns are achieved based on the prevailing market trends.
e) No later than ten (10) years from the date of commencement of the drawdown, the following options will be made available to the member:
- The income drawdown arrangement can be continued.
- The fund balance can be used to purchase an annuity from an insurance company.
- The fund balance can be converted into a cash lump sum for the member to withdraw.
f) On the death of the individual member, the fund can be used to provide an income to the nominated beneficiaries either by a continuation of the income drawdown arrangement to the beneficiaries or the purchase of an annuity or if income is not taken in this way, the balance may be paid to the nominated beneficiaries.