Capped drawdown is one of the new measures being looked at by the government in the pension reform.
Mark Hoban, financial secretary to the Treasury, said pensioners should be able to withdraw unlimited funds as long as they meet a minimum level of income. He said deciding what level of income would form one of the main outcomes of the consultation.
Included in the consultation will be the amount of tax payable on unused pension funds upon death. Mr Hoban said the consultation will propose a 55 per cent levy down from a maximum of 82 per cent.
Mr Hoban said:”This government is committed to fostering a new culture of saving and responsibility in the UK.
Kevin Stelfox, Sales Director at Retirement Solutions an independent financial adviser firm commented: “Income drawdown has long been seen as an alternative to annuitisation but many retirees are not prepared to expose themselves to the risk. Therefore any initiatives that the government can introduce to help pensioners manage their retirement income so that it lasts for their lifetime will be welcome by financial advisers.”
Kevin also added: “Buying an annuity is still likely to be the option chosen by most – for the guarantees it provides”
Dr Ros Altman, an independent policy adviser, estimated that only people with pension funds above £200,000 would benefit from the new measures.
