Drawdown levels – DIY Investors July 2018

As an experienced adviser, I am acutely aware of the need to discuss and review client finances, especially those in pension Drawdown, so I was interested in a report put together by Zurich looking at the subject of those in Drawdown, but without taking advice and doing it themselves!!

Their report highlights that thousands of people in drawdown are not looking at, considering or potentially adjusting their pension income levels to account for market volatility, which in turn could lead to their draining their retirement fund too quickly.

If we put to one side what should be the starting position of whether the fund or funds the individual has chosen are suitable or appropriate for their Attitude to Risk and circumstances, the study revealed that two in five people in drawdown are withdrawing the same amount from their pension regardless of how the stock market performs.

Twice as many retirees are deciding to keep their pension invested and draw a regular income rather than buying an annuity since the introduction of pension reforms. Nothing wrong with this in principal, but without careful advice and monitoring this could result the value of their pension pot rising or falling in line with the stock market. Zurich has found early evidence that consumers may not be aware of the need to consider adjusting their income in volatile markets, leaving them at risk of outliving their retirement savings.

Zurich’s research also revealed that a third of people using drawdown have no hands-on investment experience, and two in five have not received either financial advice or guidance. A further 29 per cent said that they were confident in their investment decisions, despite having no previous experience of actively investing.

As a result of these findings, Zurich is urging the government to publish safe withdrawal rates for retirees in drawdown, and make it mandatory for people to opt either in or out of guidance before being allowed access to their defined contribution pension.

Going back to my opening statement, having an adviser to consider where and how you are invested from the beginning of your retirement journey, right the way through and ultimately onto those whom might receive the benefits upon death, is vital.


Neil Dainton Dip PFS


This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned about the content hereof and any such action or inaction. Professional advice is necessary for every case.