Government's 'stealthy' way to shave its pension tax bill

Drop of 2% in GAD table

Hannah Godfrey
clock • 2 min read

Government changes to the GAD table, used to calculate capped drawdown limits, may push investors to swap from a capped drawdown policy into a flexi-access policy, and in doing so trigger the MPAA, according to Suffolk Life's Jessica List.

The pension technical analyst explained that, at present, those holding a capped drawdown retirement policy are able to benefit from extra pension tax relief as this policy does not trigger the money purchase annual allowance (MPAA), which last year's Autumn Statement proposed reducing from £10,000 to £4,000. In contrast, those holding a flexi-access drawdown policy are set to be affected by the MPAA from the new tax year onwards. However, List said, the government appeared to have found a "stealthy" method of subtly pushing investors to change from a capped drawdown policy into a fle...

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