More than half of people are likely to access retirement savings through income drawdown, according to the latest FTAdviser poll.
The poll, which was carried out by FTAdviser in association with Scottish Widows, asked financial advisers how their clients were receiving an income in retirement.
Income drawdown was the most popular, as 52 per cent of advisers said clients most commonly opted for this approach as a way to access income in retirement.
Some 22 per cent said their clients used a combination of an annuity and drawdown, while 15 per cent of advisers said their clients got their income from cashing in their pension.
Iain Petrie, retirement expert at Scottish Widows, said: “More and more clients are staying invested in drawdown during retirement and are also looking for income sustainability balanced against greater flexibility. This has led advisers to focus on developing sustainable withdrawal strategies which minimise risk, to ensure their clients do not run out of money.”
Steve Pennington, head of wealth planning at Arbuthnot Latham, said: “Drawdown provides an effective inheritance tax tool, as it provides the ability for the remaining pension funds to be passed down to a nominated beneficiary on death, where, if the deceased was under age 75, the inheritor will receive the fund tax free.”
Dennis Hall, managing director of Yellowtail Financial Planning, said: “Advised clients are more likely to be using drawdown because of the ongoing advice relationship.
“With poor annuity rates, clients will be looking for ways to obtain a better retirement income, and drawdown is the mechanism for doing this.”
But Jason Witcombe, chartered financial planner at Progeny Wealth, warned: “The real test for flexi-access drawdown will be during a sustained downturn in investment markets when some people, with hindsight, might wish they had opted for the certainty of an annuity.”
Only 11 per cent of advisers said their clients access their retirement income through buying an annuity alone.
Mr Petrie added: “The poll result shows that there is still a place for a traditional annuity, with a proportion of clients looking for certainty.”