Pension misery ahead

If you have a “Drawdown Pension”, prepare for a nasty surprise.

One Horsington resident was stunned to return from holiday to find his income had been reduced, at a stroke, by over one third following a review of his fund.

All pension companies are required by law to review the state of their client’s funds every 3 years to ensure the income from it is sustainable.  The rules were changed this April, and now anyone with a drawdown pension (where the funds are invested in the stock market rather than in an annuity) can expect a similar result when their pensions come up for review.

The rules now insist that funds’ maximum income limits are governed by the notional return on Gilts, which are at an all-time low thanks to printing money through quantitative easing. This applies even if the fund is not invested in Gilts.

It seems that there is no problem which cannot be made worse by Government intervention.

Pensioners in these schemes can apparently expect cuts of between 36 and 50 per cent, while MPs and the mandarins who make to rules continue to collect their gold-plated-index linked payouts.

You have been warned.

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