AJ Bell: Government blocking pension drawdown
A relaxation of rules would bring more tax revenue to the Treasury and get people spending, Andy Bell argues in letter to Mark Hoban.
Andy Bell, chief executive of platform provider AJ Bell, has written an open letter to the government calling for action on unnecessary drawdown obstacles in income drawdown by pension savers.
In his letter to Mark Hoban, financial secretary to the Treasury, Mr Bell urges the government to launch a policy review of whether gilt yields and actuarial principles remain the most appropriate way to set drawdown limits, and to re-instate the 20 per cent uplift on drawdown calculations which was removed from 6 April 2011.
The letter says some savers think the government is placing “unreasonable obstacles” discouraging them from drawing out their pension savings.
It adds: “At a time when the economy needs people to spend money, these arbitrary rules are preventing individuals from doing just that.
“Further, the additional income drawn would generate additional tax revenues for the Treasury.”
Mr Bell said: “I totally support the principles the government outlined in their previous communications with me, but feel that evidence from the market, showing that even standard annuities are now providing higher income than the maximum income available under drawdown proves the balance between flexibility and risk mitigation has tipped too far in the latter direction.
“I also believe that any concerns about excessive depletion of drawdown pension funds are imagined rather than real.”