SIPP provider AJ Bell has called on the government to reverse some of its income drawdown reforms.
Andy Bell, chief executive of the provider, said the government should permit savers to withdraw 120% of the equivalent annuity rate from their income drawdown pot.
Prior to April this year, people were able to withdraw 120% of the Government Actuary Department (GAD) rate, which is used to set annuity rates, every year from their pension pot.
However, this was reduced to 100% of GAD. This, coupled with GAD's historic low for October, means people using drawdown face sizeable cuts to their annual income, said Bell (pictured).
In an open letter to Mark Hoban, financial secretary to the Treasury, Bell called for a review of the policy of using gilt yields and actuarial principles to set drawdown limits.
He said the combination of volatile markets, combined with a reform to make drawdown income reviews compulsory every one to three years instead of every five years, has further cut drawdown income.
Bell questioned the appropriateness of basing income limits on the returns of gilts when, he claimed, it is likely most drawdown investment portfolios would invest in many other asset classes.
He suggested the government could set drawdown limits calculated on a blend of gilt and equity returns, or establish single percentage limits on groups of people, such as an 8% withdrawal limit on men under 75.
Paul Bruns and Elaine Parkes
3,000 left to transfer
Record numbers of people aged 90 plus
From 3 to 10 October