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EU gender directive to benefit pensions for women

Women in drawdown are likely to see a rise in their pension income next month as new EU gender equalisation rules come into force.

As of 21 December, HM Revenue & Customs (HMRC) has announced that it will increase the limits on capped drawdown for women to the same level as men, meaning they can take up to 8 per cent more in drawdown at retirement age.

The changes are in response to a European Court of Justice ruling that requires equal treatment of men and women in the access to and supply of goods and services. It will affect the way caps on drawdown income are calculated so that they are no longer based on life expectancy.

At the moment, women who want to leave their money invested in stocks and shares rather than purchasing an annuity are restricted on the amount they can receive each year as income. The income is capped to ensure that the pension fund lasts for the remainder of their lives, and as women live longer on average; this amount has always been lower.

Now, women in drawdown at 65 will see an 8 per cent boost in their pension income, and women at 75 will see a further increase of around 10 per cent.

Kerry Houghton, specialist SIPP & SSAS adviser at Taylor Patterson, says the changes are positive: “As drawdown pensions for women will be calculated using the same higher rate as men, they will see a significant improvement in their capped income.

“Women who are looking to enter drawdown soon, and are not eligible to enter flexible drawdown, should ideally wait until after 21 December and take advantage of this extra income. It may also be worth considering ad hoc reviews on drawdown anniversary dates”

For more information about drawdown pensions, please call Kerry Houghton on 01772 555073 or email

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