Budget 2013 Pension Drawdown

Budget 2013 Pension Drawdown

Currently the maximum pension income that can be drawn down from a pension fund in capped drawdown is 100% of the Government Actuaries Department (GAD) rate.

This is an annuity rate beased upon 15 year medium dated gilt yields.

Incomes have dranatically fallen from these pension funds as gilt yields have fallen.  It means many pensioners have suffered financially.

Already agreed is that the GAD rate will increase maximum income to 120% of the GAD rate on 26 March 2013.

In the small print of the budget report today, the Government confirms that it will consult on makinh capped drawdown more flexible by allowing the GAD to be set on longer dated gilt yields i.e. 20 years +.

What does this mean?

It means that if you are in capped drawdown, you may be able soon to draw an even greater income ffrom your drawdown pension fund.

Great news for retirement flexibility.