Boost for drawdown cash limits Pension savers who have kept their funds invested in the stock market instead of buying a guaranteed income in the form of an annuity are to benefit from a rise in income limits. From October the maximum amount of cash that can be taken from a "capped drawdown" fund will increase to its highest level in two years. The change means that a 65-year-old with a £100,000 fund moving into drawdown next month would be set a maximum annual income limit of £7,320. If the 65-year-old had moved into drawdown this month, their income limit would have been set at £7,080, or nearly 5 per cent less. The reason for the uplift is an increase in gilt yields, one of the factors used by the Government Actuary's Department (GAD) to set income limits for investors. "For those approaching retirement or in income drawdown, the latest GAD announcement is good news as it means they can take a higher level of income," said Ray Chinn, head of pensions and investments with LV=, the pensions provider. With standard lifetime annuities offering poor returns, solutions such as income drawdown and fixed-term annuities should be considered. Indeed, in a low interest rate environment such as this, where pensioners who rely on their savings for additional income are hit hard financially these alternatives become even more attractive. Though income limits are at a two-year high, existing investors will not be able to take immediate advantage of the more generous income limits unless their pension scheme gives them flexibility to do so. Currently, many investors aged under 75 are locked into set maximum cash limits for three years when these limits will be reviewed and reset. Investors aged 75 and over have these reviews annually. Some drawdown providers will allow customers on three-yearly reviews to bring forward a review to the anniversary date linked to when they went into drawdown.