Govt faces growing calls to reverse capped drawdown ban

The government is facing growing calls to reverse the capped drawdown ban due to come into force after April 2015.

The new pension freedoms announced in the Budget earlier this year put an end to new capped drawdown plans and announced a new type of drawdown called flexi-access drawdown.

Talbot and Muir head of technical support Claire Trott said “there seems to be little sense in stopping capped drawdown as it allows policyholders to monitor their income levels against a set standard without the need to lock into an annuity”.

“Capped drawdown is well established and well understood by advisers and it is a clear backwards step to remove all barriers even for those that want them. Advisers seem quite frankly confused at the government’s decision to remove a well established process of monitoring income levels and it would seem sensible that this is reassessed.

Almary Green managing director Carl Lamb said “the government has been clear in its desire to encourage long term savings, so it seems nonsensical to me that my clients are being penalised by restricting their retirement options with the removal of capped drawdown meaning the only way to take drawdown income will trigger the MPAA rules”.

“I can see a situation where a client that has previously needed to access some income receives a redundancy payment but will be limited to using just £10,000 as a pension contribution, rather than £40,000 because of the additional restrictions, but all they want to do is protect their retirement income.”

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