Platform provider AJ Bell has said that large numbers of drawdown investors will be left angered at the prospect of not being able to benefit from increased drawdown limits for up to 14 months.
AJ Bell has been at the forefront of lobbying efforts for the Government to carry out a complete review of drawdown limits which are currently based on returns from 15 year gilts. In 2011 the Government removed a 20% uplift to these limits which, together with a fall in gilt yields led to significant falls in the maximum income for drawdown pensioners. Following the lobbying activity the Government recently announced that it would reinstate the 20% uplift but did not confirm the date from which this would apply. The Government has today confirmed that the uplift will only be applied for reviews from, at the earliest, 26 March 2013 onwards. Depending upon the budget timetable, it may be later.
Individuals with a review due on 25 March 2013 will not benefit from the uplift and will have to wait 14 months, until 25 March 2014, to have their benefits reviewed using the uplifted limits.
AJ Bell Chief Executive Andy Bell said, "Once again the needs of pension savers have been put to the back of the queue. It would have been simpler, and better for pension savers, to just allow pension providers to disregard the reduction from 120% to 100% of GAD factors introduced in 2011. Then all drawdown investors could have had the immediate benefit of this relaxation, subject to their pension provider's system capabilities. Instead some of our clients will have to wait for over a year for this relaxation to take effect."
Bell continued, "Clients and their advisers know that we have led lobbying activity in this area. I can guarantee that my phone will start ringing as soon as the impact of this delay becomes clear. Drawdown investors who have been frustrated by this drop in their income will question why they have to wait as long to benefit from the Government's u-turn. These are precious years for pension savers that they won't get back."
Bell concluded, "I also hope that a full review of the rules is still on the Government's agenda. It is still on mine, as we continue to receive correspondence from clients who don't understand why their maximum drawdown income should be based on a factor which bears no relation to the typical drawdown investor's assets."
|
