Good News for Pension Income

Pension savers who have opted to keep their funds invested instead of buying an annuity are benefiting from a rise in the income limit from October to its highest level for two years.

This change means that a 65-year old with £100,000 pension fund moving into capped drawdown would be set a maximum annual limit of £7,320, more than 5% higher than the current limit. This uplift is due to an increase in gilt yields, which have moved higher as markets anticipate a tapering of the economic stimulus, known as Quantitative Easing (‘QE’). However, existing investors may have to wait to take advantage of this change unless their pension scheme gives them flexibility to do so. New retirees purchasing an annuity should also benefit from an improved pension as rates have ticked higher.

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