Income Drawdown v Annuity Purchase

Annuity v Drawdown Income Rates

The tables below show the amount of annual income that can be derived from an Annuity and an Income Drawdown or Pension Drawdown as it is sometimes called. Rates after different for a men and women. 

This income is based on the FTSE 15-year gilt yield of 3.75% for October 2009. This rate can vary on a monthly basis so these figures are for guidance only.  An Income Drawdown allows you to take an income that is 120% of the Government Actuary Department (GAD) rate which is 3.75% for the examples shown.  The annuity income is based on a single life with no guarantees and level income.

The first table shows the amounts for a man with an initial fund of £133,333.  The income is based on the fund of £100,000 after the 25% tax-free lump sum of £33,333 has been paid out.

Man Age Annuity Drawdown 120% of GAD Difference
       
50 £5,393 £5,880 £487
55 £5,738 £6,360 £622
60 £6,268 £7,080 £812
65 £6,997 £8,040 £1,043
70 £7,941 £9,360 £1,419
74 £9,041 £10,920 £1,879
       
Man Age Annuity Drawdown 120% of GAD Difference
       
50 £5,307 £5,640 £333
55 £5,541 £6,120 £579
60 £5,941 £6,600 £659
65 £6,543 £7,440 £897
70 £7,387 £8,400 £1,013
74 £8,260 £9,600 £1,340

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