The new drawdown limit of 120% will be introduced from 26 March, the government has revealed.
Chancellor George Osborne announced plans to return the limit for capped drawdown to 120% of GAD (the Government Actuary’s Department) rate in his Autumn Statement in December 2012, but gave no date for the change.
In April 2011 the government changed the drawdown limit from 120% of the GAD rate, reducing it to 100%.
Prior to this, individuals could take 120% of the income level set by GAD. This was reduced to 100% in order to prevent investors from depleting their savings too quickly.
The move to reinstate the 20% uplift at the end of last year followed growing pressure from pension providers and MPs, who received complaints from retirees hit by cuts of up to 50% in their income as the GAD rate tracked annuity rates downward.
How providers are going to facilitate this change we are unsure at the moment, although welcome for retirees in drawdown they still have to wait until March.
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Source: Citywire NMA Alex Steger