I’ve just been reading a report which said that hundreds of thousands of unadvised drawdown investors are unaware they can scale back or even stop their withdrawals, according to new research from a major pension provider.
In April, the Company concerned carried out an online survey of 2,028 adults aged over the age of 55 who had accessed their defined contribution pensions since 1 April 2015.
What this survey showed was that 52% of those surveyed did not know they could reduce their withdrawals, and a further 56% were unaware they could stop withdrawing money altogether.
If these figures are reflective of the general population – of which 615,000 are in drawdown – then around half could be exposed to much more risk if stock markets plunge and the value of people’s remaining funds reduces dramatically.
The head of retail platform strategy at the pensions firm, said anyone unaware of the flexible withdrawals provided by drawdown could seriously damage their savings.
‘If investment returns come to a sudden halt, savers need to be prepared to step on the income brakes,’ he said.
‘People who are unaware they can slow down, or stop their withdrawals, could seriously damage their savings, and deplete their pots too soon.’
What concerned me was that the implication of the report was that a huge number of investors were still in the “accumulation” stage of their pensions rather than moving to “decumulation” now that they were in drawdown. This fact could be extremely likely given that so many were unadvised.
Of course, maybe “accumulation” is the right answer for some. But if they haven’t taken advice and don’t know about the flexibility afforded by drawdown…
Are you in drawdown? Are you about to go into drawdown? Are you or will you be in the right type of contract? Have you gone ahead and taken income without taking advice? If this is the case, perhaps the cost of the advice may well be worth the money in the long run.
If you would like to chat to us about your options, give us a call on 0141- 956 5525 or drop us an email at [email protected] We are always happy to talk.