Annuity v Drawdown Income Rates

The tables below show the amount of annual income that can be derived from an Annuity and a Capped Drawdown. The rates are different for a men and women.

A Capped Drawdown allows you to take an income that is 100% 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.

Man Age	Annuity	Drawdown	Difference
55	£3,480	£5,500	£2,020
60	£3,936	£6,000	£2,064
65	£4,608	£6,800	£2,192
70	£5,544	£8,000	£2,456
74	£6,600	£9,300	£2,700

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.

Woman Age	Annuity	Drawdown	Difference
55	£3,288	£5,200	£1,912
60	£3,732	£5,700	£1,968
65	£4,320	£6,300	£1,980
70	£5,136	£7,200	£2,064
74	£6,024	£8,200	£2,176

To find out what income your fund could provide call our Freephone number or complete our quick enquiry form.

Annuity rates taken from the FSA Money Made Clear website on the 4th February 2011. The tables above are for illustration purposes only.

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Financial Advisers

Jonathan Walker
Jonathan is the director and joint owner of the Pension Drawdown Company.

Robert Bolton
Robert is a practising Barrister and is also fully qualified as a Diplomaed Financial Adviser.

Bob Diamond
Bob is a Pension Specialist who has been with the company since its incorporation in 1996. Bob has been a financial adviser since 1989.

Andrew Ross
Andrew is a diplomaed financial adviser with a history in banking.

Roger Easterbrook
Roger is a diplomaed financial adviser with a background in Executive Search.

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Market Monitor

Updated: 14th May 2012

Heavy selling following the elections in Europe and banking woes in Spain resulted in markets ending the week lower. Weekend elections in Greece and France set a volatile tone and reminded investors that politics really matter in financial markets; political wrangling in Athens to form a government resulted in threats to unravel the country's bailout deal and raised the prospect of Greece exiting the euro area.

Global stocks had their longest losing period in six months during the week and the euro its worse run of daily reverses since 2008.

However, Thursday marked a turning point as investors cautiously returned to markets and risk assets showed resilience following $2bn trading losses at JPMorgan Chase (which also occurred on Thursday). In addition, the Michigan survey of US consumer confidence, which rose to a four-year high in May, also helped to provide support and end the week on a more upbeat note.

The increasingly gloomy outlook for the global economy sent commodity prices to their second week of losses, and gold retreated to four month lows. Weakness in the global economy drove demand for safe-haven government bonds, which pushed German bunds and UK gilts to record lows, while peripheral eurozone debt came under heavy selling pressure.

Important information: This update is intended to be for information purposes only.

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