Rule changes for drawdown plans

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HM Revenue & Customs (HMRC) has changed the rules over the transfer of capped drawdown plans. Some investors will now avoid drops of up to 55% of their income.

Changes to HMRC rules mean investors will no longer need to have their income limits reviewed after a transfer. This applies if they are on pre-April 2011 rates and five yearly reviews. The change affects those with drawdown anniversaries that fall on or after 26 March.

If a drawdown investor was transferring, it triggered a review of drawdown limits. With Government actuarial rates at an all-time low, that could have led to a drop of up to 55% in maximum possible income.

The new rules mean that those who wish to change providers can do so without concern.

Investors should consult an independent financial adviser before taking any decisions regarding their drawdown plans.

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