HMRC urged to lift 2% gilt floor to ease drawdown pressure

Jenna Towler
clock

The 2% floor in gilt rates, set by HM Revenue & Customs in 2011, should be lifted to 3% or 4% to ease financial pressure on pensioners in drawdown, a provider has said.

Rowanmoor Pensions said many pensioners are facing huge drops in retirement incomes from next month, as gilt levels fall to their lowest possible level of 2%. The firm explained falling gilt yields severely reduce the amount that can be drawn from a fund under capped drawdown. A 70-year-old male can expect to face a reduction of about 9% in income per 1% reduction in gilt yields, Rowanmoor said. August's rate is more than 3% lower than the 5.25% rate of August 2007. Pensioners who took an unsecured pension in August 2007 will be "severely affected" and see a considerable drop in incom...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on uncategorised

Building Society-owned Newcastle Financial Advisers acquires Openwork firm

First of a number of acquisitions

Hannah Godfrey
clock 09 December 2019 • 1 min read

Bond managers fear hedges being undermined as liquidity dries up

The recent sell off in the bond market and growing liquidity issues have forced bond investors to use similar hedging techniques, undermining their effectiveness and causing concerns about how much downside protection funds really have.

Anna Fedorova
clock 03 July 2013 •

Police launch investigation into mortgage middleman fined £1m

West Midlands Police have launched a fraud investigation into a Birmingham financier over his role in sale and rent back agreements.

clock 25 June 2013 •