Budget 2014: Insurers slash limits on drawdown pension plans

21st March 2014

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LV= is the latest pension provider following Standard Life, to cut the threshold on its income drawdown pension plans which will go live from next Thursday.

Richard Rowney, LV= life and pensions managing director asserts that the group is altering its proposition to ensure that those approaching retirement will be able to take full advantage of the increased flexibility the Chancellor’s announcement offers from 27 March.

LV= will be ready to quote clients considering capped drawdown at 150% of GAD, a rate set by the Government from next Thursday.

Rowney said: “We will be able to quote 150% of GAD for potential fixed term annuity clients from Monday 24 March. We have reduced our minimum contribution for capped and flexible drawdown to £30,000 and reduced the amount needed to satisfy the minimum income requirement for flexible drawdown to £12,000. In addition, in a drive towards wider flexibility as to how retirees take their benefits, we are removing our administration charge for those clients in flexible drawdown whose funds fall below £37,500.

“For the majority of people, retirement is no longer an absolute event whereby they hit 65 and leave the workplace forever. It’s become a phased event and solutions such as fixed term annuities and income drawdown fit very neatly into that space. We believe that the changes that we are  implementing will make these propositions even more attractive to advisers and their clients.”

The trade website for independent financial advisers Money Marketing  has also reported that other firms may not be able to make required changes to the new maximum GAD levels fast enough.

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