How it works

Very briefly, income withdrawals work like this:

Income must not exceed a maximum set by the Inland Revenue, and you don't need to make any withdrawals
The maximum limits are set at the outset and then reviewed every 5 years (see GAD table below)
An annuity can be purchased at any time up to age 75
By age 75 you must do one of two things: buy an annuity (or switch to ASP, but this is highly unlikely).

Example of GAD maximum income limits with £300,000 net of tax free cash

MALE
Age 55	Age 60	Age 65
£21,600	£23,400	£26,280

FEMALE
Age 55	Age 60	Age 65
£20,880	£22,320	£24,480

The GAD (Government Actuary Department) maximum income limit is based on the best annuity rates available on the open market at the time the policy is set up and take account of the client’s age and amount of retirement fund at that time. The rates relate to a level annuity with no spouse benefit.

A high level of withdrawals up to or close to the maximum amount could erode the policy’s capital value. This could lead to a lower level of income in the longer term for you, and your dependants, if you die.

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