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.

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“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.”