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New GAD tables cut maximum income for older pensioners

Pensioners moving from unsecured pensions into alternatively secured pensions will see their maxi- mum income fall dramatically under the proposed new tables from the Government Actuary’s Department.

Standard Life head of pensions policy John Lawson says the near 40 per cent drop in maximum income for males moving from unsecured pensions – or pre-75 drawdown – into alternatively secured pensions – or post-75 drawdown – is the most noticeable feature of the changes.

He says this will reduce a 75-year-old male’s maxi- mum income, based on a 100,000 pension fund, from 11,400 to 6,930.

For males aged over 61, maximum drawdown levels are also set to decrease. For example, at age 74, the new maximum drawdown level will provide an income 2.6 per cent lower than the current maximum.

Those aged under 60 will benefit from increased drawdown levels of up to 1.8 per cent for a 55-year-old.

Younger females also benefit from new maximum rates up to age 71. At age 55, the maximum increases by 8 per cent.

However, for women aged 74, the maximum drops by 1.2 per cent.

The revised GAD tables are based on medium-term gilt yields and reflect changes to the GAD’s previous assumptions on longevity.

Lawson says: “Perhaps the biggest shock will be felt by those moving from unsecured into alternatively secured pensions under the new rules. This could result in a fall in maximum income of nearly 40 per cent.”

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