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Providers divided on Flexible Drawdown

04 April 2011

The Financial Times is reporting that some pension providers will not be offering the flexible drawdown option until later this year.

New legislation, which is due to come into force this Wednesday, will permit people who meet the new flexible drawdown requirements to claim their unsecured pension benefits as lump sum payments.

To view the new rules and requirements for flexible drawdown click here

However some providers have confirmed to the Financial Times that they will not be offering this facility until the draft legislation has received Royal Assent, which is expected to be in July.

Richard Mattison of James Hay, a self-invested personal pension provider said:

"We plan to offer flexible drawdown, but will only do so when we are absolutely certain that the government will not go back on the draft rules"

"It is a small probability but there is still a chance that if the law is not given Royal Assent that individuals who take all their funds could be faced with an unauthorised borrowing charge."

Hornbuckle Mitchell have also confirmed that they will be holding off until the Rules have received Royal Assent and have stated that they will not offer flexible drawdown until the third quarter.

Not all providers have taken this view and Robert Graves of Rowanmoor said "We will not stand in a member's way if they request this from next week,"

Billy Mackay of AJ Bell said:

"You would only delay delivery if you thought that the consultation/legislative process was heading in a direction that put flexible drawdown at risk. This is simply not the case."

People looking into the flexible drawdown option should consider obtaining financial advice before proceeding.

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