Don't miss drawdown window: AJ Bell
Investors looking to move into drawdown have a limited window in which to seek advice and avoid their potential income being hit by a double dip in the next tax year, AJ Bell has warned.
Billy Mackay, marketing director for the provider, warned that the 20 per cent lowering of the maximum income drawdown level to 100 per cent of the equivalent annuity in April has been compounded by new Government Actuary's Department tables, which reduce the available maximum income further.
Mr Mackay said that, based on current gilt yields, a 60-year-old male investor going into drawdown before the new tax year with a fund worth £300,000 will be allowed to draw a maximum income of £22,320.
Anyone going into drawdown from 6 April this year will have a maximum income, based on the new GAD tables and rates, of £18,300 - an 18 per cent reduction, he claimed.
Mr Mackay said: "The wording of the rules as they stand also allows investors to lock themselves into the higher 120 per cent GAD figure for five more years, by moving a part of their pension into drawdown before 6 April 2011.
"By doing this, if at any point in the next five years they move the remainder of their fund into drawdown, the maximum pension will still be worked out using the 120 per cent rate."
Matthew Allen, director of London-based Mulberry IFA, said: "There is definitely a window of opportunity for those who may want to go into drawdown and maximum income. There is a question over how many will go for the maximum."