Capped drawdown reinstated at 120% when?

SallyG

Capped drawdown reinstated at 120%
Anyone know when?

mania112

I received an email earlier (from a product provider) which said:

No specific implementation date was communicated but we understand that this change requires legislation for which a draft will be issued this month, followed by a period of industry consultation with a view to inclusion in the Finance Act 2013 following the Budget. We believe this is likely to result in Royal Assent in July 2013.

SippTechie

The only point I'd add is that the Government does want this to be introduced as soon as possible.

The implementation date will come down to how long it will take everyone to update their pension systems and whether people in the industry are happy to make the change on the basis of draft legislation or whether they are only happy to act on enacted legislation.

On the basis that the company I work for could make the change tomorrow, is happy to work with draft legislation, and has been calling for this change for over a year as a first step to a more comprehensive review, we'll be asking for this to come in asap.

Proxy

SippTechie wrote: »

The only point I'd add is that the Government does want this to be introduced as soon as possible.

The implementation date will come down to how long it will take everyone to update their pension systems and whether people in the industry are happy to make the change on the basis of draft legislation or whether they are only happy to act on enacted legislation.

On the basis that the company I work for could make the change tomorrow, is happy to work with draft legislation, and has been calling for this change for over a year as a first step to a more comprehensive review, we'll be asking for this to come in asap.

One of the few companies then.

Whilst most insurers and the ABI were discussing the changes and coming up with something far more sensible, the 120% was suddenly sprung up in this announcement.

The ABI was looking at a more swaps+bond spread approach to the base tables.

mania112

Also, those already in Drawdown/FTA's will have to wait until their triannual review to benefit from this income increase rate to GAD.

Although, most if not all products allow customer-requested reviews outside of the normal schedule.

gadgetmind

Proxy wrote: »

the 120% was suddenly sprung up in this announcement.

They needed to do something. The 2% gilt floor was a sticking plaster and re-introducing the 120% a bandage. A more permanent fix will take much longer.

gadgetmind

mania112 wrote: »

Although, most if not all products allow customer-requested reviews outside of the normal schedule.

One might hope that they make this a free review when the 120% comes back in, and contact customers to let them know.

mania112

I think it will become possible to revisit your income levels at annual review point, rather than waiting for the triannual one.

GhIFA

mania112 wrote: »

I think it will become possible to revisit your income levels at annual review point, rather than waiting for the triannual one.

There are a number of providers who already offer this at the annual review point.

Proxy

gadgetmind wrote: »

They needed to do something. The 2% gilt floor was a sticking plaster and re-introducing the 120% a bandage. A more permanent fix will take much longer.

Given the 120 won't be back for at least six months, there's plenty of time.

mania112

Proxy wrote: »

Given the 120 won't be back for at least six months, there's plenty of time.

Some providers I believe will allow 120% of GAD when the draft legislation is carried.

This extra income can then be accumulated and paid out when the legislation is fully passed.