Bearing in mind that 3.25% was the rate’s peak in 2013, it looks like 2014 has started in a promising fashion. Hopefully this will lead to an improvement in fortunes of retirees as gilt yields are an important indicator of the direction of annuities.
Doncaster, South Yorkshire (PRWEB UK) 18 January 2014
The maximum income that can be taken from income drawdown and fixed term annuity contracts – the GAD rate – will remain at 3.25% next month. This is the second time in four months that the rate has been upheld and it means that 2014 has been stable so far with regards to GAD.
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 3.25% in February has brought some stability to the market. Bearing in mind that 3.25% was the rate’s peak in 2013, it looks like 2014 has started in a promising fashion. Hopefully this will lead to an improvement in fortunes of retirees as gilt yields are an important indicator of the likely direction of annuities.”
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.