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Pension Funds

Volume 486: debated on Wednesday 21 January 2009

To ask the Secretary of State for Work and Pensions what assessment he has made of the effect on pensioners of the Government Actuary’s decision to reduce draw-down rates from pension funds; and if he will make a statement. (247211)

I have been asked to reply.

Tables drawn up by the Government Actuary’s Department on behalf of HM Revenue and Customs (HMRC) determine the rates for income withdrawal rates from pension funds. The current tables took effect on 6 April 2006 and have not subsequently been changed by the Government’s Actuary. The tables are used to calculate the maximum level of unsecured pension or alternatively secured pension that may be paid in light of the pensioner’s age, gender and the prevailing yield figure on UK gilts. The rates of pension that can be provided using these tables have changed along with movement in gilt yields.

Flexibility in the withdrawal rules allows pension schemes to pay between 0 and 120 per cent. of amounts shown by the Government Actuary’s tables to members under the age of 75, and so, in most cases, to pay as much income as if an annuity had been purchased.