The Government has rejected calls to change income drawdown rules after a Treasury review found they are a “reasonable match” to annuity rates.
In its Autumn Statement today, the Treasury said the way income withdrawal rates are formulated will not be changed after it ordered a review in the March Budget.
The Association of British Insurers has called for the Government Actuary Department maximum used to set drawdown rates to be calculated using a mixture of long-term corporate bond yields and long-term gilt yields. The GAD maximum is currently based on 15-year gilt yields.
Insurers say this would better reflect the price of a single-life annuity on the open market and increase the maximum income available.
The Government increased the maximum amount a person in capped drawdown can take as income from 100 per cent to 120 per cent of the equivalent GAD annuity rate. It had initially reduced it from 120 per cent to 100 per cent in April 2011.
But the Treasury said: “At Budget 2013, the Government commissioned its Actuary’s Department to review income drawdown tables to ascertain if income drawdown rates are a reasonable match to annuity rates.
“In light of GAD’s findings that withdrawal rates are a reasonable match to annuity rates, the Government will not change the basis on which the GAD tables are formulated.