Pru shakes up drawdown following Budget

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Prudential has reduced its minimum premium for investing in its Flexible Retirement Plan drawdown product from £50,000 to £25,000, before payment of any tax free cash.

In addition the insurer has announced it will be ready to offer full, flexible drawdown by 6 April 2015, in line with the changes announced in the Budget.

The government announced in the Budget that it will cut the income requirement for flexible drawdown from £20,000 to £12,000; raise the capped drawdown limit from 120 per cent to 150 per cent; increase the size of a lump-sum small pot to £10,000; and increase the overall size of pension savings that can be taken as a lump sum, from £18,000 to £30,000.

Pru said means that if the rules come in as initially indicated, drawdown will be available from Prudential with no GAD limits for anyone with pension savings of £25,000 or more.

This will be available for both new and existing FRP customers.

Vince Smith-Hughes, head of business development at Prudential, said: “The chancellor announced in the Budget some of the most far reaching changes to the retirement income landscape ever seen.

“We welcome the flexibility that this will bring to customers and believe it can only encourage more people to save into pensions and help bridge the savings gap in the future.

“However it should be remembered that these proposals are not set in tablets of stone, and there could be further changes before they are embedded into regulation.

“For now, we are delighted to have been able to reduce our minimum premium for drawdown to £25,000 to assist advisers in giving advice in the transitional period, and declare our intention to be fully ready for the new drawdown regime when it comes in next year.”

Standard Life reduced the minimum amount customers need for its drawdown product range from £50,000 to £30,000 last month, while LV also has dropped its minimum drawdown pot size to £30,000.