HMRC’s decision to remove the need for investors to have their income limits reviewed following a transfer if they are on pre-April 2011 rates and five-yearly reviews under capped drawdown legislation has been welcomed by Suffolk Life.

The change applies to those with drawdown anniversaries that fall on or after 26 March 2013 and will remove any concerns that people have of switching providers. Those with anniversaries before this date will still need to have their limits reviewed following a transfer.

A pension scheme transfer triggers a review of the investor’s drawdown limits from the anniversary following a transfer. Since April 2011, and until the restoration of 120 per cent GAD income is complete, an investors income has reset to 100 per cent GAD leading to lower drawdown incomes. Falling gilt yields have also meant that there has been a fall in GAD rates.

Suffolk Life head of marketing Greg Kingston said: “The current situation could have resulted in poor outcomes for investors. Advice resulting in lower income would be difficult to justify, even where the best advice would be to switch providers. That situation should now be resolved and HMRC are to be applauded for listening then acting."

Pensions technical manager Claire Trott added: “From the peak to the trough investors could have seen as much as 55 per cent drop in their maximum possible income, although not all would be in receipt of the maximum. This change means that they can now transfer without that concern.”

Share Story: