News: January 2013
Where the purchase of an annuity is not attractive, given the rate applying at the particular age, the option is to take a drawdown until you are of an age when the annuity rate is more palatable. The maximum income that you can withdraw from a drawdown pension fund was capped at 100% of the equivalent single-life annuity from 6 April 2011. That will revert to the previous limit of 120%. This is certainly good news and increases flexibility. A 65 year old male, for example, might expect an annual annuity of only 5%. A drawdown arrangement will under the new rule allow 6% (120% of 5%) to be taken from the pension fund.