Capped Drawdown GAD changes

The 15 year gilt rate used to calculate capped drawdown reviews was previously capped at a minimum of 2%. From July 1, 2017 this will be removed and lower rates can be used.

If this change had been made since January, 2017 the GAD figure would have been the following:

Jan 2017Feb 2017March 2017April 2017May 2017

Example –  based on a £200,000 fund for a 65-year-old, the change would have the following impact:

Hartley’s View

There is a small window of opportunity for clients with forthcoming capped drawdown benefit reviews. The 60 day rule can be used for clients to request an early review by nominating an early date.  The review can be completed early but the change in income will not apply until the actual review date.

This will work for all clients that are due a review between July 1 to August 28, 2017.  If the GAD rate for June 15, 2017 is below 2%, clients could ask their pension administrator for an earlier review.  The review could then be carried out on the 2% GAD figure.

By Michael Baber | May 26, 2017 | 0 Comments

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