Mark Soper – RetireEasy

We learnt last week that the Pensions Regulator is relaxing the accounting rules for Company Pension Schemes to help them through the economic downturn. The Regulator blamed much of the crisis on low gilt yields which have been directly depressed as a result of the Government’s quantitative easing (QE) programme. The Pension Regulator said ‘’ Low gilt yields have the effect of driving up current measures of pension scheme liabilities and as a result will typically worsen scheme funding levels’’. 

However, this major u-turn does not help the many thousands of individual retirees who
receive their retirement income from Drawdown Plans. In April 2011, when  the gilt yield was 4.00%, the Government decided to cut the amount an individual could withdraw from a Drawdown Plan from 120% of GAD to 100% of GAD.

Since then the Government has embarked on another round of QE and the gilt yield has
almost halved to 2.25%.  Surely, now that the Pension Regulator has taken decisive action to help company pension schemes, HMRC must also act and provide relief to individual retirees by restoring the 120% of GAD rule. After all, HMRC will directly benefit with increased income tax revenue from the retired population – something they are quite keen on it seems!

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