Following on from the increase in the GAD rate to 120%, investors in Income Drawdown Plans – the main alternative to annuity purchase – got a further boost today, thanks to improving gilt yields.
The GAD drawdown yield used to calculate the maximum amount of income that can be withdarwn from the pension fund has increased to 2.75% from August income reviews.
In December 2012 the rate was floundering at 2.0% and compared to then a 65 year old, with a pension fund of £150,000 can now take additional income of more than £1,000 p.a.
Income Drawdown is not for everyone and Retireeasy recommends anyone deciding whether to take retirement benefits via an annuity, income drawdown or a combination of the two should seek professional guidance.
