Drawdown clients fear income fall, MGM advisers
Drawdown reviews show that diminishing retirement income is the number one client fear, research by MGM Advantage suggests.
Most clients using income drawdown are worried about falling income following reviews, advisers have told retirement income specialist MGM Advantage.
In a survey of 126 advisers, 91 per cent said clients are worried about their fall in income following drawdown reviews.
Advisers gave four major examples of strategies to cope with these falls.
Just over 60 per cent use investment-linked annuities to exit drawdown, and 38 per cent top up the drawdown pot from other savings the client may have.
Phasing an exit from drawdown using annuities accounted for 24 per cent of advisers while just under one in five said their clients were happy to accept the income fall in the hope that markets recover.
In terms of client concerns, the top priority for clients is to preserve income, with 52 per cent suggesting this is a key issue. Falling annuity rates are also concerning 49 per cent of clients, while the background of inflation eroding spending power is a top priority for 38 per cent of people.
Only one in four advisers suggested their clients’ top priority was to preserve capital.
Andrew Tully, pensions technical director at MGM Advantage, said: “We are in the middle of a perfect retirement storm which shows no signs of abating.
“Annuity rates tumbling, the global economy in a perpetual state of turmoil, interest rates at historic lows, and inflation higher than the Bank of England target have left retirees wondering what next.”