10th September 2013
Scottish Life: A turbo boost for drawdown clients
Increase to GAD limits for September
Earlier this month the Government confirmed that the GAD rate for September will be 3% - the highest level since November 2011.
Coupled with the increase in the GAD limit back to 120% in March, this could provide clients who are due an annual review in September with a 41%* increase in the maximum income available to them.
* This example is based on a male client entering drawdown at age 60 in September 2012 with a value of £75,000 (after tax-free cash was taken), taking maximum income and requesting an ad-hoc review at the end of the first year. For the purpose of this example we have assumed the value of the fund was sustained at £75,000 after the first year.
However based on 12 month performance in Income Release invested in Governed Retirement Income Portfolio 3, the value would actually be around £79,435 resulting in a 49% increase in the maximum income available to the client.
This again highlights the flexibility income drawdown can offer.
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