London, London (PRWEB UK) 29 March 2013
Investors appear ready to take advantage of new relaxed drawdown rates due to come into effect from 26th March onwards according to Selectapension, a leading provider of pension and investment planning software. Quote request volumes registered across the company’s drawdown calculators during Q1 2013 are already up by more than two thirds (68%) on the previous year with further interest anticipated once the rates come into force this week.
The change in the rules, ratified in last week’s budget, means from March 26th onwards, those choosing to release retirement income via capped drawdown rather than taking out a regular annuity can access funds equivalent of 120 per cent of the equivalent annuity income. In real terms this means that investors can draw a fifth more income meaning that:
65 year old male with £100,000 using the current gilt rate of 2.75%
100% GAD maximum income would be £5,800
120% GAD maximum income would be £6,960
60 year old female with £100,000 using the current gilt rate of 2.75%
100% GAD maximum income would be £5,100
120% GAD maximum income would be £6,120
This is likely to impact positively on uptake for income drawdown products which are already popular largely due to their flexibility and the poor returns from annuities.
However, for those with clients currently taking drawdown income, it’s worth bearing in mind that the move back up to a 120% income limit only comes into force at the start of the individual’s next drawdown annual review after 25th March 2013. So, for some, there’s almost a year to wait to benefit from this increase. In addition, there’s still significant industry lobbying to increase the GAD rate further, so advisers need to be aware that rates could alter further in the coming months. Financial advisers can review and accurately predict how any of these changes impact your clients’ retirement income using Selectapension’s calculators which compare products and income options.
Andy McCabe, Managing Director at Selectapension, commented:
“It’s encouraging to see that the Government is finally looking to support greater choice in the pensions market. In the longer term, increasing the GAD rate coupled with relaxing laws on Sipps and simplifying the personal pensions market can only be seen as a boost for innovation in the pensions industry, which will enhance investment choice in the longer term. But at outset, implementation could be a minefield of new legislation for advisers unless they have access to up to the minute data. This is where technology can be a major strategic enabler, ensuring you can price in any changes to rates seamlessly.”
Selectapension offer one of the largest ranges of tools and pensions technology in the retirement market –offering around 50 providers with almost 400 products.
Selectapension is a leading provider of pensions and investment planning technology for intermediary and enterprise markets.
Founded in 2004 by MD, Andy McCabe, Selectapension’s initial tools focussed on helping IFAs conduct DB scheme analysis and advise on complex money purchase schemes. Selectapension quickly expanded its range to include specialist tools geared to providing much needed analysis on QROPs transfer, income drawdown, provider comparison as well as general retirement planning calculators. It is continually reviewing its offer to look for new ways to improve the customer experience and add value.