Women are set to experience an increase of around 40 per cent in their pension drawdown limits according to Standard Life.

For drawdown reviews in March, the gilt yield used to calculate the income limits for income drawdown users will increase to 2.75 per cent up from 2 per cent. Findings from the company show that on 1 December, a 60 year old female with a drawdown pot of £100,000 could take £4,300 a year on 1 December 2012. However, combined with the effects of the EU gender directive on 21 December 2012 and rising gilt yields, mean that if reviewed on 1 March up to £5,100 could be taken.

Further, after 25 March the 120 per cent GAD rate will be implemented “turbo-charging” income limits by another 20 per cent. Therefore, a woman’s yearly income in the above scenario would rise to £6,120, an increase of 42.3 per cent on the 1 December 2012 outcome. A 60 year old male is likely to experience a 33 per cent increase on the 1 December 2012 limit.

Investment director at Standard Life Investments Sebastian MacKay said: “The gilt yield used for drawdown is up from its lowest level of 2 per cent to 2.75 per cent. Gilt yields have risen without the support of central bank purchases, as a reduction in euro break-up risks lead safe haven flows to dissipate and as doubts about the UK’s fiscal situation continue to arise. We expect these trends to continue.”

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