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LV= comments on July GAD rate

18 June 2015 | LV= commentary


Ray Chinn, LV= Head of Pensions and Investments said:

“The GAD rate for capped drawdown policies for July remains at 2.25 %. This means that the amount a 65 year old income drawdown client can take from their fund will be £55.00 per £1,000. This means that a 65 year old client with a £100k fund will be able to take £8,250 from their pension fund.

“Following the advent of flexible access drawdown, the GAD rate no longer determines the maximum income savers can take from their pension. However, it retains relevance for those we have seen chose to remain in capped drawdown to prevent a reduction in their future annual allowance limit for tax relief. In addition, some advisers and customers may still see GAD as a useful measure to avoid a rapid depletion of pension funds – something which is highly topical following the recent publication of the FCA’s Retirement Income Study. With pension savers now having greater choice as to how they take an income from their pot, we would always encourage retirees to consider all the options available to ensure they make the most of their savings, but also be mindful of withdrawing too much too soon given the amount of time people can live in retirement. We would also encourage people to take the benefit of professional financial advice when shopping around for retirement solutions.”

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