How Safe Is Your Pension
Defined Benefit, or Final Salary Schemes, in the UK have a collective deficit of £253 billion as at the end of March. This is reported by the government sp…
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10 March 2010
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Annuity v Drawdown Income RatesThe tables below show the amount of annual income that can be derived from an Annuity and an Income Drawdown. The rates after different for a men and women. This income is based on the FTSE 15-year gilt yield of 4.04% for March 2009. This rate can vary on a monthly basis so these figures are for guidance only. An Income Drawdown allows you to take an income that is 120% of the Government Actuary Department (GAD) rate which is 4.00% for the examples shown. The annuity income is based on a single life with no guarantees escalating at 3% per annum. The first table shows the amounts for a man with an initial fund of £133,333. The income is based on the fund of £100,000 after the 25% tax-free lump sum of £33,333 has been paid out.
The following table shows the amount of annual income for a woman with the same initial fund of £133,333, with the income being based on the fund of £100,000 after 25% tax free cash has been deducted.
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