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.
Importance of expert, financial advice.
The study suggests over half of individuals who have unlocked their personal pension since the introduction of pension freedoms in 2015, were unaware they could scale back or stop withdrawals from their pension funds despite flexible income being a key feature of pension drawdown.
The report also revealed a stark difference in the knowledge of those who sought advice and those who hadn’t. Indeed, while only 35% of non-advised retirees knew they could reduce drawdown income, 77% of respondents receiving ongoing advice were aware of this fact.
There is a danger to this ignorance; it puts people unwittingly at risk of losing their pension funds in a stock market crash, as their funds are invested through income drawdown policies. This is known as ‘pound-cost-ravaging’ (not to be confused with ‘pound cost averaging’) and is where people are forced to sell more investments to achieve desired income demands. Working with your drawdown pension is vitally essential and signing up with a financial expert for ongoing advice can help reduce future financial problems and disasters.
Pension Freedom has brought a higher level of flexibility for retirees, allowing them to take money out of their pension pots when they need them. But, it’s suggested that over half of individuals who have unlocked their pension savings since the Pension Freedoms started in 2015 were unaware that they could scale back, stop withdrawals or even purchase a pension annuity further down the line to cover essential bills.
Retirement Planning With Pension Works
At Pension Works, our defined contribution pension experts are ideally placed to deliver ongoing advice through your retirement.
Our retirement planning service covers every aspect of your future, from advice on whether pension drawdown, pension annuity or a hybrid is the best option for you. The retirement planning report, produced by your adviser, will also suggest a level of income you could take without having a detrimental impact on your future.
*Zurich, June 2019