Extension of draw down relief for account based pensions
With the continued volatility and depressed price levels in equities markets, the Government have announced yesterday that the 25% reduction in the minimum payments for account based pensions will be extended to the 2012-13 year.
They believe that around 125,000 self-funded retirees will benefit from this extension, and reduce the need for them to sell assets at a loss in order to meet the minimum payment requirement.
The Government had previously halved the minimum payment amounts for account-based pensions for the 2008-09, 2009-10 and 2010-11 financial years. with a 25 per cent reduction provided for the 2011-12 year. This has now been extended to the 2012-13 year. The reduction in the minimum payment amounts will apply to account-based, allocated and market linked pensions. Regulations giving effect to this change will be made before the new financial year.
Its a sobering thought and a stark reminder of the times we are living in that these reductions will have applied for 5 financial years at the end of the new extension period.
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Narendra Tailor says:
Please clarify that the extension to the 2012-2013 of 25% reduction in the minimum payments for account based pensions means that the minimum drawdown of 2% in lieu of 4% will continue until then.
December 13th, 2011 at 3:02 am
thesmsfreview says:
Narendra – the extension to the 25% reduction in minimum payments means that for someone aged 55 to 64, instead of 4% applying, it will be 3%. i.e. its a 25% reduction to the regular minimum payment factor.
December 13th, 2011 at 10:56 am