Friday, 18 January 2013 10:00
Drawdown limits to return to 120 per cent on 26 March says HMRC
HM Revenue and Customs has announced the date of drawdown limits being increased to 120 per cent will be 26 March.
Drawdown limits were reduced from 120 to 100 per cent of the Government Actuary's Department rate in April 2011. However, in his Autumn Statement last year, Chancellor George Osborne announced they would return back to 120 per cent.
Alastair Black, head of customer income solutions at Standard Life, said: "The increasing gilt yields and the restoration of the 120 per cent limit is heartening news for those in drawdown. There is a strong argument for creating a fairer basis for setting drawdown limits by amending the underlying calculations, bringing them more in line with annuity rates they are supposed to mirror."
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But Andy Bell, chief executive of Sipp provider AJ Bell, said pensions savers would be less happy with the announcement.
He said: "Once again the needs of pension savers have been put to the back of the queue. It would have been simpler and better for pension savers to just allow pension providers to disregard the reduction from 120 per cent to 100 per cent of GAD factors introduced in 2011.
"Then all drawdown investors could have had the immediate benefit of this relaxation, subject to their pension provider's system capabilities. Instead some of our clients will have to wait over a year for this relaxation to take effect."
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Drawdown limits were reduced from 120 to 100 per cent of the Government Actuary's Department rate in April 2011. However, in his Autumn Statement last year, Chancellor George Osborne announced they would return back to 120 per cent.
Alastair Black, head of customer income solutions at Standard Life, said: "The increasing gilt yields and the restoration of the 120 per cent limit is heartening news for those in drawdown. There is a strong argument for creating a fairer basis for setting drawdown limits by amending the underlying calculations, bringing them more in line with annuity rates they are supposed to mirror."
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But Andy Bell, chief executive of Sipp provider AJ Bell, said pensions savers would be less happy with the announcement.
He said: "Once again the needs of pension savers have been put to the back of the queue. It would have been simpler and better for pension savers to just allow pension providers to disregard the reduction from 120 per cent to 100 per cent of GAD factors introduced in 2011.
"Then all drawdown investors could have had the immediate benefit of this relaxation, subject to their pension provider's system capabilities. Instead some of our clients will have to wait over a year for this relaxation to take effect."
• Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.
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