General Insurance Article - GAD rate positive but change needed in drawdown calculation

 LV='s Ray Chinn comments on April's GAD rate, highlighting how change is needed in how income drawdown limit is calculated so that it is not linked to gilt yields.

 “Retirees today have far more choice about how to structure their income in retirement and alternative solutions such as income drawdown, investment-linked or fixed term annuities should be considered. Many could find that income drawdown offers them the flexibility they require in retirement. We would always encourage people to take advice, in order to get the most from their retirement income.

 “Even though it is positive that the GAD rate has been held we would still like to see changes to the way the income drawdown limit is calculated so that it is not linked to gilt yields. We think clients’ income would then be better protected from instability in the market.

 “Figures show that, from April, the amount a 65 year income drawdown client can take from their fund will be £59 per £1,000. This means that a 65 year old client with a £100k fund will be able to take £7,080 from their pension fund.”