Adviser > Individual > Drawdown > Flexible Drawdown
Flexible Drawdown
I have a client who is already in drawdown. What GAD limits apply?
Prior to 6 April 2011, the GAD limit was 120% of the GAD relevant annuity with a review every 5 years. After that date the limit is 100% GAD with reviews every 3 years.
If your client’s went into drawdown before 6 April 2011 and so has a GAD limit of 120%, this will apply until the next 5 year review is due, at which point the new limit will apply with triennial reviews.
What if a client with 120% GAD transfers his drawdown plan?
This will trigger a review on the new basis which will apply from the next pension year anniversary, even if a review is not yet due. This could result in the 100% limit applying before it otherwise would.
If my client partially crystallised his plan into drawdown before 6 April 2011 will the new limit apply to further crystallisations from that plan?
It depends how the plan is set up. If the plan has integrated crystallised and uncrystallised sections, putting more money into the drawdown part will be treated as an ‘additional designation’. Although an additional review will have to be done (effective immediately) this will be on the 120% basis. The original 5 year review date will be unchanged.
Some plans (especially those set up before A-Day) are organised in segments with separate crystallisation of each segment. For these plans the new limit will apply to further crystallisations but the segments already crystallised won’t be affected.
If a plan is partially crystallised into drawdown before 6 April 2011 and it then receives a transfer of uncrystallised money is a review on the new basis triggered?
No, funds already crystallised will be unaffected. What then happens when uncrystallised funds are put into drawdown will depend on how the plan is set up, as covered above.
Last update 02 April 2012
65W0780
For professional advisers only
