From October, the amount a 65 year income drawdown client can take from their fund will increase from £59 to £61 per £1,000. This means that a 65 year old with a £100,000 fund will be able to take £7,320 rather than £7,080 from their fund.

Pensioners who keep their money invested in the stock market are subject to a cap each month set by the Government Actuary Department (GAD).

The GAD rate for October 2013 has been set at 3.25%, up from 3.00% in September.

Ray Chinn, LV= head of pensions and investments said: “For those approaching retirement or in income drawdown, the latest GAD announcement is good news as it means they can choose to take a higher level of income.

“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.

“Unlike other major financial decisions, once someone chooses how to structure their retirement income, they can’t typically review their decision further down line so it is important that they purchase a product that ensures their needs are best met both now and in the future. We would encourage people to seek advice in order to maximise their income in retirement.”