Advisers have been asking self-invested personal pension provider Talbot and Muir whether their clients will still be able to use capped drawdown products after April 2015, Claire Trott has said.
The head of technical support at the small provider said: “We have been taking an increasing number of calls from advisers questioning their client’s ability to enter capped drawdown post-April next year.
“There seems little sense in stopping capped drawdown as it allows policyholders to monitor their income levels against a set standard without the need to lock in to an annuity.”
The new pension freedoms announced in the Budget earlier this year put an end to new capped drawdown plans for members after April 2015 and announced a new type of drawdown called flexi-access drawdown.
Under the Money Purchase Annual Allowance rules, people who do not want to take advantage of the pension reforms but want traditional pension arrangements may be penalised because they may find they do not have the flexibility to make larger pension contributions should their circumstances change.
Ms Trott added: “Capped drawdown is established and understood by advisers and it is a backwards step to remove all barriers, even for those who want them. Advisers seem confused at the government’s decision to remove this process of monitoring income levels and it would seem sensible that this is reassessed.”
Adviser view
Carl Lamb, managing director for Norwich-based Almary Green, 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.”
