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12 December 2012 09:26
It pays to wait to buy an annuity following Chancellor George Osborne's Autumn Statement
Retired people who have not yet purchased an annuity could receive 20% more income from their savings than those who have already taken the plunge.
In a reversal of his decision in on the matter in last year's Budget, Chancellor George Osborne has revealed he will raise the maximum drawdown from pension pots from 100% to 120% of Government Actuary's Department limits. This means that a person will now receive £6,360 before tax on savings of £100,000, whereas prior to the change they would only receive £5,300. It is believed that Mr Osborne's change of tack will affect around 50,000 people a year.
Those who delay making the commitment could use the extra cash generated from their savings to purchase senior travel insurance to ensure they are covered when they go away on holiday. The turnaround comes after the Daily Telegraph campaigned to ensure that people had greater freedom in how they spent their money once they stopped working. Michelle Mitchell, Director General for Age UK, said: "We welcome the change announced in the statement. This caused hardship among people who had already retired and were using income drawdown."
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