The income drawdown option could provide many with the flexibility they need and we would encourage people to seek advice and consider all the options available, in order to maximise their income in retirement.
Doncaster, South Yorkshire (PRWEB UK) 19 December 2013
The maximum income that can be taken from income drawdown and fixed term annuity contracts – the GAD rate – will rise to 3.25% next month. The 0.25% increase has brought about the end of a brief levelling off period and further allays the fears that rates were set to tumble after November’s 0.25% fall. A view that My Pension Expert dismissed in their previous GAD report.
What the new rate means is that a 65 year-old in income drawdown will now be able to take £61 per £1,000 from their pension fund, compared to the previous £59 figure. An individual with a £100,000 fund will be able to take £7,320 rather than £7,080.
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: “This rise in the rate will enable retirees using income drawdown to unlock hundreds of extra pounds from their pensions, which in turn can help relieve some of the financial pressure they may be under. The income drawdown option could provide many with the flexibility they need and we would encourage people to seek advice and consider all the options available, in order to maximise their income in retirement.”
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.