Pensions - Articles - GAD drawdown yield confirmed at 2.75% for August


Pension drawdown users got a boost today when the GAD drawdown yield, which is used to calculate the amount of income they can take from their pot, was confirmed at 2.75% for August income reviews.

 This is up 0.25% from July - and well ahead of the lows of 2.0% seen towards the end of 2012. The yield rise will boost the income a 65 year old can take from their drawdown pot by 3.5% compared to July. For a 65 year old, with a typical £150,000 pot, this could unlock another £360 income this year.

 Alastair Black, Head of Income Solutions at Standard Life, comments:

 "Drawdown is all about flexibility. A higher income limit gives more flexibility to dial income up or down to meet changing needs, so the rising yield is great news for drawdown users.

 "It's not about always taking the maximum income allowed, it's about having the flexibility to take more income when it's needed and reduce it down again when it isn't. The more room drawdown users, and their advisers, have to adapt to changing circumstances the better.

 "August's higher yield may be the catalyst to trigger income reviews to lock-into a higher limit. And the Government's plans to kick-start an early review to get drawdown rates back to reality signals more good news in the pipeline for drawdown users."

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