17th July 2013
Investors in income drawdown will be able to take more from their pots – in August income reviews – as the GAD income drawdown yield has risen to 2.75%.
This is up by 0.25% from July and, as pension company Standard Life points out, it is far above the 2% lows at the end of 2012.
It says the yield rise would boost the income a 65 year old can take from their drawdown pot by 3.5% compared to the month before. For someone with a typical £150,000 pot this could unlock another £360 of income.
Obviously this potentially means you will be taking more from your pot and, depending on returns, will reduce your capital sum faster.
Standard’s head of income solutions (the expert on drawdown) Alastair Black puts the emphasis on the flexibility this gives you. He says: “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 always taking the maximum income allowed, it’s about having the flexibility to take more income when it’s needed and to reduce it down again when it isn’t. The more room drawdown users – and their advisers – have to adapt to changing circumstances the better.”
Standard Life would, of course, like you to transfer your drawdown pot to them. It has launched a new drawdown transfer option, giving most drawdown users the ability to trigger an immediate review of the income they can take when they transfer. If you have an adviser however, it goes without saying that you should consult them before contemplating such as move.
And note some pension experts are a little worried that the increasingly liberal approach to drawdown from the regulators and the government amid concerns some people running their pots down too quickly. But it does seem you will have more flexibility in the nexth month and that must be a good thing if you are aware of what you are doing.