This month we see a second consecutive increase in the GAD, Government Actuaries Department rate. The rate increases from 3.75% to 4.00% for income drawdown plans.
Therefore the GAD calculations with a £100,000 fund will be:
Male, 60 [100% GAD = £6,000], [Max income (120% GAD) = £7,200]
Male, 65 [100% GAD = £6,800], [Max income (120% GAD) = £8,160]
Female, 60 [100% GAD = £5,700], [Max income (120% GAD) = £6,840]
Female, 65 [100% GAD = £6,300], [Max income (120% GAD) = £7,560]
The rates above are for the current income drawdown plans that will be replaced in April 2011 by ‘Capped Drawdown’ and ‘Flexible Drawdown’, which although the maximum income will be reduced to 100% from 120% of the GAD rate, will give more flexible retirement options and in particular not having to annuitise at age 75.
Whilst the ability to take up to 120% of the GAD rate seems a great idea to maximise income it does deplete the remaining fund very quickly especially in time s of poor investment performance.
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