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The Difference Between The Best And Worst Pension Incomes Can Be Very Surprising

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Archived Annuities News / Income Drawdown News

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Treasury denies income drawdown reforms

The Treasury has quashed rumours suggesting that it was set to publish a consultation on income drawdown reforms.

The claim was made by Adrian Boulding, Legal & General pension’s strategy director, in a Twitter post, suggesting that the consultation would be published today (November 16th).However, this was categorically denied by the Treasury.

Speaking to the FT Advisor, a spokesperson for the Treasury, said: “Someone has got the wrong end of the stick.”
Mr Boulding corrected his earlier tweet by saying: “My 100th tweet was a disastrous confusion. There is no Treasury consultation on drawdown. It’s something different.”

Drawdown arrangements allow pensioners to keep their pension fund while still enjoying an annual income, and around 400,000 pensioners are said to have this type of income arrangement.

Under drawdown, the maximum annual income is determined by rules from the Government Actuary’s Department, which links this figure to the yield on a 15-year gilt – the ‘GAD’ rate – at the time income is first drawn.

This is then fixed until it is reviewed after three years. New rules introduced in April last year, reduced this cap from 120% of GAD to 100%.

Last month the Association of Member-Directed Pension Schemes, an organisation representing companies that provide income drawdown arrangements to retirees and includes providers such as Liverpool Victoria and Standard Life, met with the Treasury to prompt the government to reconsider this cap, arguing that it is only adding to pensioners’ money woes.

The Association of British Insurers has also recommended the GAD rate be linked to a mix of long-term corporate bonds and gilt yields instead of 15-year gilt yields.

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