Drawdown Retirees Unaware of Income Flexibility

Are you a retiree who has taken out Pension or Income Drawdown in order to fund your retirement? Here’s some information you’ll want to know…

Drawdown retirees unaware of income flexibility

A YouGov survey commissioned by Zurich has revealed that most retirees in drawdown are unaware they can vary their level of income. Unsurprisingly, the research also found those not receiving financial advice were more likely to be in the dark.

Importance of advice

The study suggests over half of individuals who have unlocked their savings 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 drawdown.

A stark difference was also revealed in the knowledge of those who had sought advice and those who hadn’t. Only 35% of non-advised retirees knew they could reduce drawdown income while 77% of respondents receiving ongoing advice were aware of this fact.

‘Pound-cost-ravaging’ trap

There is a danger to this ignorance as it puts investors unwittingly at risk of draining their pension pots if stock markets fall.

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 unsustainable income levels. Engaging with your drawdown savings is vitally important and ongoing advice is critical throughout retirement.

³Zurich, June 2019

Get in touch

Please don’t hesitate to get in touch with our Financial Advisor based in East Sussex for advice on Pensions, Income Drawdown and more. We will offer you an initial pension review free of charge and our advisor, Paul Clifford, can travel across the South East to meet you – Eastbourne, Brighton, Hastings, Bexhill, Uckfield, Heathfield, Hailsham, Seaford, Newhaven, Tunbridge Wells, Maidstone, East Grinstead and further afield.

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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.

It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within the blog is for information purposes only and does not constitute financial advice.

The purpose of the blog is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.