The Government Actuarial Department rate is set to fall to just 2 per cent next month, the lowest amount it is allowed to be.
This will mean a 0.5 per cent fall to its lowest level in over two years. It peaked earlier this year at 3.25 per cent.
Scott Mullen, director at My Pension Expert, said: “To see Gad drop by 5 basis points in one go to its lowest level of 2 per cent signifies a huge drop in what retirees can take from their pensions through income drawdown and fixed term annuities, where investors are limited to the level of income set by the government.
“This is however like the sea receding before a tsunami, as in just over four months’ time the Gad limit will be removed which will mean a tidal wave of pension withdrawals,” commented Mr Mullen.
“While we are still working to the old system it does seem a little odd limiting further what people can take now, when in the near future unlimited access will be granted.”
ruth.gillbe@ft.com
