Govt confirms new drawdown limit start date

The Government has confirmed the new drawdown income limit of 120 per cent will be introduced from 26 March this year.

Capped drawdown was launched as part of Government reforms to abolish compulsory annuitisation at age 75.

Following the changes, which came into force in April 2011, the maximum amount a person in capped drawdown could take as income was reduced from 120 per cent of the equivalent GAD annuity rate to 100 per cent.

Chancellor George Osborne (pictured) announced in his Autumn Statement in December plans to reinstate the 120 per cent cap following industry concern about the impact low gilt yields, coupled with the reduced income limit, were having on peoples’ retirement incomes.

A HMRC spokesman says: “We are proposing to increase the drawdown limit to 120 per cent from March 26.”

A J Bell head of platform marketing Mike Morrison says: “This is good news for a lot of people but we now need to see a root and branch review of drawdown and annuities to make sure they remain fit for purpose.”

Source of article: Tom Selby, Money Marketing, 17.1.13

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