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AJ Bell claims drawdown change delays will hurt savers

by Daniel Grote on Jan 18, 2013 at 07:55

AJ Bell claims drawdown change delays will hurt savers

Sipp provider AJ Bell has argued the government's announcement of a 26 March launch date for the reinstatement of the 120% limit for drawdown could leave some savers waiting up to 14 months before they can reap the benefit.

The government yesterday revealed that the reinstatement of the drawdown limit to 120% of the Government Actuary's Department (GAD) rate  would take place on 26 March. The government had lowered the limit to 100% of the GAD rate in April 2011, sparking protests from pension providers including AJ Bell, who claimed the move unfairly punished savers.

AJ Bell said the timetable for the introduction of the change would leave many savers with a long wait to benefit. '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 terms,' it said.

Chief executive Andy Bell (pictured) said the government had placed the needs of savers 'at 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,' he said. '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.'

6 comments so far. Why not have your say?

JStevens

Jan 18, 2013 at 09:57

Most providers can change maximum income calculations on anniversaries. But are there any out there who can only re-calculate the GAD maximum on the triennial anniversary? And will providers be able to change their systems and literature in time for the first cases eligible for the new 120% rate on 25th March?

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Thornton Wells

Jan 18, 2013 at 09:58

There is at least one way to 'trigger' a review rather than waiting for the annual review date. As always individual circumstances would need to be taken into account.

That aside these types of changes do have some arbitary cut-offs. When the rate fell to 100% there was a warning period, allowing those with review dates in that gap to request a review and fix their pension at 120%. Not particularly fair on those who didn't have the luck to fall in that time frame......

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Usually found sitting on the fence

Jan 18, 2013 at 13:03

Alternatively just allow all pensioners the option to increase their current income up to 120%, without a review, just based on their current max income allowed... How hard can that be?

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Mike Morley

Jan 18, 2013 at 17:32

@USFOTF But when did common sense ever have anything to do with legislation - particularly that relating to pensions?

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Simon Kershaw via mobile

Jan 18, 2013 at 23:12

Given that the tinkering with drawdown rules was carried out by muppets who should not be let out without their nannies the best course of action would be to "look through" the original car-crash and continue as if nothing had happened.

Fat chance.

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Ossie Westham

Jan 24, 2013 at 08:58

Wow, wait over a year if on 10k max GAD for an extra 2k, whatever will these clients do?? The 2k will remain invested during a hopefully bullish 2013 so no harm really done...

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