Can you afford drawdown?

The pension freedoms that have been given to everyone aged 55 or over, offer the chance to use drawdown, once the preserve of wealthier retirees, no matter how much has been saved.  This ability to dip into your pension for cash lump sums as well as to use it to provide a retirement income is open to everyone but it’s only realistic if you’ve saved £100,000 or more.

Just because everyone can now access drawdown it doesn’t mean that everyone can actually afford to do it. Many independent financial advisors have real concerns that individuals don’t understand how long their retirements could be being a bit rash in accessing cash in the early years, leaving them with a meagre income in later years.

Simon Massey, wealth management director of MetLife, a pension provider, says ‘There is a key question about…how long your money will last,’ he said, ‘ a man aged 65 has a one-in-four chance of living to 90 and a one-in-10 chance of living to 100.’ Massey believes that in order to be able to benefit from drawdown, someone needed savings of ‘between £100,000 and £150,000’ as a minimum. ‘Unfettered drawdown is right for some clients if they have the capacity for loss and they can take a long-run view but not a lot of customers are in that position,’ he said.  In short, many people have not saved enough to be able to raid their pension for lump sums and also expect it to provide an income.

Massey said recent stock market turbulence had added to the problems of drawdown cash running out as some people who had their money invested through a drawdown plan ‘will be feeling the effects of the downturn right now’. If you need help looking at your drawdown options Enable’s IFA’s in Bishop’s Stortford are happy to look at the options with you.




Issued by: Enable Independent Financial Life Planners 
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE  

Pension freedom is upon us?

With new pension freedoms now available Enable’s IFA’s in Bishop’s Stortford can see that only one thing is really clear and that is that the new world of pensions is unchartered waters for providers, advisers and consumers alike.  In this brave new world finding the right path to generating the income you need from savings to retire is what it is all about. Income, security, access and inheritance are the most common priorities among those nearing retirement in our experience but the most used traditional solution to providing for retirement- the annuity is not proving popular.

In a recent Platforum report, financial advisers were asked how likely it is that they would recommend various retirement savings products in light of the current pension changes. Annuities came off badly, with almost 40 per cent of advisers saying they would not recommend them confirmed by annuity sales figures having plummeted since the pension freedoms were first announced.  This shift presents a huge challenge for providers, particularly as it would seem consumers do not like annuities either the Platforum consumer research also found that only 5 per cent of Telegraph readers would consider an annuity at retirement.

So what will people over 55 choose to do with their pension cash? Non-advised drawdown looks like a particularly risky pension plan many advisors like Enable of Bishops Stortford are looking closely at the options and one very positive outcome is the idea of a multi-asset managed drawdown product, In the Platforum report 60 per cent said they were likely to recommend this route, with only 22 per cent unlikely to do so. A number of fund managers have already brought products to market, most of which look to generate income and offer potential capital growth over the medium to long-term for their clients. If you need help planning your financial future Enable’s IFA’s are happy to talk you through your options.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE