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Treasury denies drawdown consultation

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Treasury denies drawdown consultation

The Treasury has said rumours of a drawdown consultation are untrue.

Adrian Boulding, Legal & General pensions strategy director, posted on Twitter that the Treasury was set to publish a consultation on reforming drawdown rules.

However the Treasury said there were no plans for a consultation.

As Government Actuary’s Department (GAD) rates have continued to fall many capped drawdown investors have seen the amount of income they are able to take cut dramatically, sometimes by as much as 50%.

The amount of income available through drawdown contracts has fallen for many pensioners in the past couple of years due to a reduction in gilt yields and rules limiting the GAD rate to 100% for those who could not guarantee a £20,000 annual income.

Sipp provider AJ Bell recently renewed its campaign to return the GAD rate to the pre-2011 level of 120% for those on capped drawdown. The campaign received responses from a number of MPs voicing their concern about cuts to drawdown income, including pensions minister Steve Webb.

The Association of British Insurers has recommended the GAD rate be relinked from 15-year gilt yields to a mix of long-term corporate bonds and gilt yields.

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