IFAs have just days to lock clients into GAD

IFAs face a race against time if they want to lock clients into the 120 per cent GAD income rates for the next five years, according to Suffolk Life.

Treasury reforms ending compulsory annuitisation come into force in just six days time. Under the new rules, investors entering drawdown for the first time from April 6 will have their maximum income calculated using 100 per cent of the Government Actuary’s Department rate.

Providers often split pension pots into units, with each unit representing a fraction of the total fund. Suffolk Life, for example, splits its plans into 1,000 units.

Pensions technical manager Claire Brooks says clients could only need to crystallise one of those units to secure 120 per cent GAD rate for five years.

She says: “There are still opportunities for advisers to help their clients. If a client wants to take benefits now while in the process of moving providers, it may be possible to crystallise just one unit.

“Depending on the way in which the provider admin- isters partially drawn plans, this could mean that as they crystallise further units, the limits will be recalculated using the 120 per cent of GAD rate instead of 100 per cent of GAD.”

AJ Bell marketing director Billy MacKay says: “If you have got any clients that are likely to require income in the coming five years and that income requirement is likely to be at or near the maximum, then why wouldn’t you give them the added flexibility of income planning up to 120 per cent?”