Paul Lewis The rules which currently apply to those under 75 will in future apply at all ages. In other words, people with a pension pot will be able to leave it invested in a regulated drawdown scheme and take income from it without buying an annuity. The level of income can range from nothing – if they are still working or have other means – to a cap of about 120% of a typical annuity. At present, those rules end at 75. But from April they will extend to any age.
A person with a very large fund will be able to take more than the capped amount of income if they leave enough in the fund to provide an adequate income – called a minimum income requirement – without claiming more from the State.
The changes will not help the majority of people, whose problem is that they have too little money in retirement, not too much. But it has been welcomed by the financial services industry and is good news for the wealthy minority who find they have saved more than they need for their retirement.
The details are set out in a consultation paper which will consider the cap on the drawdown amount, the tax on the balance left at death, and the level of the minimum income requirement.
Details: hm-treasury.gov.uk/consult_age_75_ annuity.htm
Written by Paul Lewis, this article was first published in the September 2010 issue of Saga Magazine. Paul's opinions are his own and for general information only. Always seek independent, professional, financial advice.