The income limit on capped drawdown arrangements will be increased from 100% to 120%, restoring the 20% uplift, chancellor George Osborne has announced.

Those in capped drawdown will now be able to take income at 120% of GAD rather than 100%,

Before 2010 reforms took effect individuals could take 120% of the income level set by GAD. This was reduced to 100% in order to prevent investors from depleting their savings too quickly.

Only people who could secure a £20,000 annual income could drawdown an unlimited amount.

In recent months MPs have come under mounting pressure from retirees hit by cuts of up to 50% in their income as the GAD rate has tracked annuity rates downward.

In November New Model Adviser® revealed the government was considering relaxing the GAD limits in the Autumn Statement.