...this move to maintain the rate will hopefully ease the fears of many retirees who were worried that the previous decrease was a sign that further reductions were on the way.
Doncaster, South Yorkshire (PRWEB UK) 22 November 2013
The maximum income that can be taken from income drawdown and fixed term annuity contracts – the GAD rate – will remain at 3% next month. This is the first time in six months that the rate has remained at the same level.
Income drawdown allows people to keep their pension pot invested but withdraw an income from it each year. However, the amount of income that can be taken is set by the Government’s Actuary’s Department (GAD) and is known as the GAD rate. The GAD rate is set against standard annuity rates which in turn are influenced mainly by gilt yields (UK government bonds), with low gilt yields equalling low annuity rates.
Scott Mullen from My Pension Expert said: “The news that the Government’s Actuary’s Department has decided to maintain the GAD rate at 3% in December has brought some much needed stability to the market after the previous month’s decrease. The 0.25% decrease which occurred was somewhat a surprise given that annuity rates had increased by 6% in the third quarter of this year, the largest quarterly increase since August 2009 and that rates overall were up by 12% since January, a two year high. So this move to maintain the rate will hopefully ease the fears of many retirees who were worried that the previous decrease was a sign that further reductions were on the way.”
Monitor GAD rates and their impact on the investments at retirement at My Pension Expert for regular news and updates.
My Pension Expert is a company of Diploma Qualified Financial Advisors specialising in options at retirement.