A dependants’ drawdown pension (flexi-access or capped) may be payable to a dependant (see 5.4) from a registered money purchase pension scheme or cash balance scheme on the death of a member. The income may be paid as a drawdown pension from a short-term annuity or income withdrawal/drawdown directly from the fund. It is taxed under the PAYE procedures.
Capped drawdown is only available to a dependant where the dependant’s pension started before 6 April 2015. Capped drawdown may convert to flexi-access drawdown at the request of the dependant or when the maximum withdrawal (150% of the basis amount) is exceeded.