A YouGov survey by Zurich* has revealed that most retirees in pension drawdown are unaware they can vary their level of income drawdown. And, perhaps most alarming, the research found those not receiving professional finance advice were more likely to be potentially missing out in retirement.
When the new pension rules of Pension Freedoms came into force in April 2015, fears were expressed that pensioners might raid their pension pots to go on a spending spree through pension drawdown.
Since pension freedoms, a pension annuity has experienced something of a drop in popularity. Income drawdown has become increasingly popular, and many people have taken to the idea of being able to access money when they need it. However, it’s worth giving pension annuities a second thought – it might be the best option for you.
Thanks to pension freedoms, there is now more flexibility than ever over how you are going to take your pension. Pension drawdown has become particularly popular in recent years, but there are still advantages to the more traditional pension annuity.
Income drawdown is the newest option. Your defined contribution pension acts like any other investment as you pay into your private pension and – hopefully – see your investment grow. When you retire, you can withdraw money as and when you need it. The rest of it stays invested in your pension pot to potentially keep growing. A pension annuity, however, allows you to guarantee a regular income for the rest of your life or for a set period of time. The income is always there, and in most cases, you cannot change or cancel if you change your mind.
