Investors close to retirement are being urged to sort out their income drawdown arrangements before ...
Investors close to retirement are being urged to sort out their income drawdown arrangements before the Government's proposed modifications come into force.
Government income drawdown proposals, as put forward in the Green Paper and set to be implemented in April 2005, will reduce the lump sum payment options available to the spouse on the death of their partner.
While the money will no longer incur a tax charge when taken as a lump sum, the spouse will only receive the amount initially invested in the fund at the time the drawdown plan was taken out. The insurance companies will pocket all of the growth the fund has achieved.
Moreover, no lump sum will be available for over 75s so if there are no dependants to use the fund for annuity or continued drawdown purposes, the insurance company again benefits.
Spouses will only gain access to their partner's full fund value if it is used to continue income drawdown or buy an annuity.
David Marlow, head of marketing at The Drawdown Bureau, said he is advising investors with a pension pot in excess of £250,000, who are looking to retire in the next couple of years, to arrange their drawdown facility quickly as the rules may be implemented sooner than expected.
'Some of the Green Paper proposals have been implemented sooner than anticipated, so the warning to consumers is to use this gap before the proposals are implemented to plan effectively,' Marlow added.
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