The GAD rate for January 2014 has been announced as 3.25% - up from 3% - a move which will help people using income drawdown, says LV=.
Ray Chinn, LV= head of pensions and investments, said the move would allow income drawdown clients to take several hundred pounds more per annum from their pension pot and would aid flexibility. It would also aid phasing, he said.
Mr Chinn said: "For the majority of people, retirement is no longer an absolute event whereby they hit 65 and leave the workplace forever. It's become a phased event and income drawdown fits very neatly into that space.
"Indeed, one of the reasons clients use income drawdown is because it allows them to turn the 'income tap' on and off. For those clients that continue to work this is extremely useful as it means that they can access their fund but can drip feed the income so they don't end up in a higher tax bracket."
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LV= says the increase will mean that in January, a 65 year-old income drawdown client with a £100,000 fund will be able to take £7,320, rather than £7,080, from their fund.
Mr Chinn added: "An income drawdown product could provide many with the flexibility they require and we would encourage people to seek advice and consider all the options available, in order to maximise their income in retirement."
LV= and Liverpool Victoria are trade marks of Liverpool Victoria Friendly Society Limited and LV= and Liverpool Victoria are trading styles of the Liverpool Victoria group of companies. The company is based in Bournemouth.