Government Considers Income Drawdown Reform for those with Medical Conditions
14 February, 2014
Talks have been held between the UK Government and UK insurers regarding possible reforms to Income Drawdown rules to enable those with health conditions to take more income in retirement.
Income Drawdown is a way for people to access their UK pension without purchasing an annuity. Personal pensions like Self Invested Personal Pensions (SIPPs) can offer Income Drawdown.
Currently under UK Income Drawdown rules, unless a person qualifies for Flexible Drawdown (by having a secure pension of more than £20,000 p.a.) a person can only draw an annual income equivalent to 120% of the GAD rate (as set by the UK Government Actuaries Department). This limit cannot be increased even if a person suffers from a medical condition that reduces their life expectancy. This differs to the ability for those with certain health conditions to qualify for enhanced annuities.
As a result, this potential change could be of great benefit to those with medical conditions. However, it is important that people take financial advice so that they understand the risks associated with drawing down their pension too quickly.