Only flexi-access drawdown can be opened today; capped drawdown, shut to new arrangements from 6 April 2015, puts a reviewed cap on yearly withdrawals.
If you are comparing flexi-access vs capped drawdown, the first thing to know is that only one of them can be started today. Capped drawdown survives only for people who were already in it in April 2015. MoneyHelper's Pension Wise service gives free, impartial guidance, backed by government, on both. Where the answer turns on your other pots and your age, an FCA-authorised adviser firm can go through them by phone at no cost; to book it, use the form on this page.
Capped drawdown is closed to newcomers
HMRC's Pensions Tax Manual is plain about the cut-off: "no new capped drawdown funds or flexible drawdown funds may be set up from 6 April 2015 onwards." Arrangements that began on or before 5 April 2015 may carry on, provided nothing since has converted them. For anyone designating money for drawdown now, the manual calls flexi-access drawdown "the only unsecured pension option" where no funds in that arrangement were designated before 6 April 2015.
Flexi-access drawdown is the ordinary pension drawdown described in our drawdown guide: you draw "any amount over whatever period" you choose, with no ceiling set by the scheme. This page is about the older arrangement and what separates the two. If you are weighing flexi-access against taking lump sums, see flexi-access drawdown versus UFPLS.
How the annual limit in capped drawdown is set
In capped drawdown there is no minimum to take each year, but there is a maximum. The manual describes it as a percentage of an "equivalent annuity" that the fund could buy, called the basis amount. The scheme administrator works the basis amount out from Government Actuary's Department (GAD) tables, using your age, the fund's value and a 15-year UK gilt yield. For pension years starting on or after 27 March 2014 the limit is 150% of the basis amount. Earlier pension years had lower percentages, which no longer matter for current years.
Some practical rules follow:
- The limit is counted per pension year, a 12-month period running from the date funds were first designated. Taking less than the maximum does not let you carry the unused balance into later years.
- It applies to each arrangement separately, not to the whole scheme.
- Under 75, the maximum is usually recalculated every three years. From 75 it is recalculated every year.
- For someone under 75, some events prompt an early recalculation: using part of the fund to buy a lifetime annuity, a pension sharing order on divorce, or designating more of the same arrangement.
New money designated into an arrangement that is still in capped drawdown joins the existing capped fund rather than starting a flexi-access one. Before April 2015, exceeding the limit was an unauthorised payment. Now it has a different consequence, covered below. The pot stays invested in either kind of drawdown. MoneyHelper warns that while the money stays invested its value moves up and down until it is withdrawn, so what you can take out may turn out higher or lower than you expected. A limit is a ceiling on withdrawals, not a promise of income. The wider risks are in are drawdown pensions safe?
What the limit looks like in pounds
HMRC's own worked example is a member in their early sixties with a £145,000 fund and an assumed 15-year gilt yield of 4.25% in 2014. The GAD table HMRC used gave £62 of annuity per £1,000, so the basis amount was £8,990 and the 150% maximum was £13,485. Our working: £145,000 ÷ £1,000 = 145; 145 × £62 = £8,990; £8,990 × 150% = £13,485; and £13,485 is about 9.3% of the £145,000 fund. These are a 2014 illustration, not current figures: gilt yields, ages and fund values change every calculation. Your administrator can say what your current maximum is. How much to take within a limit, or without one, is the subject of how much to take from drawdown.
Staying in capped drawdown and the money purchase annual allowance
The money purchase annual allowance (MPAA) is a lower limit on tax-relieved pension saving that starts once you have flexibly accessed a defined contribution pension. HMRC's guidance for people still in capped drawdown (PTM062750) says the MPAA rules do not apply "so long as" two conditions hold:
- you do not take drawdown pension in any drawdown pension year above your maximum capped drawdown amount; and
- you have not flexibly accessed benefits under any other money purchase arrangement, which includes taking an uncrystallised funds pension lump sum from one (see UFPLS explained).
So staying below the limit on this fund is not enough if a different pot has been accessed flexibly. The MPAA and its current amount are covered in our annual allowance guide and what the money purchase annual allowance is; if you are still paying into pensions, it is worth checking before you change anything. One conversation with an FCA-authorised adviser can cover every pot you hold, tax and State Pension alongside; leave your number in this page's form to arrange it.
Moving from capped to flexi-access drawdown
A member in capped drawdown on 5 April 2015 could stay or convert. The manual lists three ways a capped fund becomes a flexi-access fund:
- Taking too much. A payment that goes over the maximum makes the fund "newly designated" immediately before the payment, so it is no longer excessive, as there is no limit under flexi-access.
- Asking. You can notify the scheme administrator at any time that you want conversion. They do not have to agree, and if they decline you stay in capped drawdown.
- Transferring. If you move a capped fund to another scheme and designate it there, you can choose to have it treated as newly designated, in which case the receiving administrator cannot refuse, or you can simply carry on in capped drawdown.
HMRC's list of MPAA trigger events (PTM056520) covers all three routes. For a capped fund that converts through an excess payment or on notification (where no valid flexible drawdown declaration was made before 6 April 2015), and for one re-designated as flexi-access on a transfer, a trigger event occurs "immediately before the first payment" from the flexi-access fund. After that the MPAA applies for that tax year and every later one. Anyone who wants a guaranteed income instead can read about switching from drawdown to an annuity.
Questions about capped and flexi-access drawdown
Can I still start a capped drawdown plan?
No. No new capped drawdown funds may be set up from 6 April 2015. Money designated now goes into flexi-access drawdown, unless it is added to an arrangement that is still in capped drawdown, where it joins the capped fund. Whether a provider offers flexi-access drawdown at all, and on what terms, is for the provider to say; the options are set out in your options at retirement.
What happens if I take more than the cap?
The fund converts to flexi-access drawdown, and the payment is treated as flexi-access income. It may bring the MPAA into play for that year and later ones, so the limit is worth checking before a large withdrawal.
Is there a minimum I must take?
Not in capped drawdown, where HMRC's manual says there is "no minimum amount that must be taken each year". Flexi-access drawdown has no required minimum either; see the minimum drawdown rules.
Should I stay in capped drawdown or convert?
The rules do not decide it for you. The points people weigh are whether the yearly ceiling gets in the way, whether any other pot has been accessed flexibly, whether they are still saving into a pension, and what their provider will agree to. Anyone over 50 can book a free Pension Wise appointment that covers this ground.
Your next step
The difference comes down to this: capped drawdown has a reviewed yearly ceiling and keeps the MPAA away while both conditions hold; flexi-access has no ceiling, and the MPAA starts with its first income payment. Only flexi-access is open to new arrangements. If your own plan might be affected, Pension Wise costs nothing, and so does the enquiry form here, which arranges a phone conversation with an FCA-authorised adviser about your own capped or flexi-access plan.
Sources, accessed 20 October 2026: HMRC Pensions Tax Manual, PTM062520, PTM062530, PTM062540, PTM062550, PTM062560, PTM062710, PTM062750, PTM056520; GOV.UK, Personal pensions: get help; MoneyHelper, Pension Wise and Pension drawdown (archived copies, June and September 2026). Our working: 20 October 2026.