Budget 2013: GAD to review income drawdown tables

Author: Helen Morrissey
Retirement Planner | 20 Mar 2013 | 14:41

Categories: Income

Topics: Mike Morrison| Aj Bell| Suffolk Life| GAD| Income Drawdown| Budget 2013| annuity market

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The government has commissioned the Government Actuary’s Department to review income drawdown tables.

The Budget 2013 document said the review will look at the assumptions used to provide drawdown rates to "make sure they continue to reflect the annuity market".

From 26 March capped income drawdown rates are due to rise from 100% to 120% of the value of an equivalent annuity.

AJ Bell's head of platform marketing Mike Morrison believes the link between annuities and income drawdown needs to be severed.

"We need to get rid of the association between income drawdown and annuities," he said. "We need to recognise annuities are longevity insurance and income drawdown is not so the assumptions used to provide drawdown rates should be something different. For instance we have put forward the idea that drawdown rates should be based on age or based on the investments they have in their portfolio."

Suffolk Life's head of marketing Greg Kingston disagrees: "Yes, these are different products but this is exactly why the return to 120% max GAD is good as this provides the extra flexibility clients need.

"The review is a sensible idea as it will ensure drawdown rates remain accurate as GAD rates have at times been so poor that they have effectively fallen below annuity rates."

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