David Fox, sales and marketing director of Dentons, says advisers still need to consider what income is needed in retirement and the risk level of the client.
For clients that need a regular income and who can phase income to make sure they perhaps move from a higher rate tax band to a lower one as their income reduces in retirement, Mr Fox says income drawdown is an ideal solution.
He says it can also be used as an inheritance tax planning tool and some clients may prefer to leave as much of their pension fund as possible untouched in order to minimise a tax charge on death.
Mr Fox says: “Advisers need to take into account their clients short term and long term income requirements to make ensure the lowest marginal rate of income tax is paid.
“Estate planning needs should also be considered and the use of PCLS should take this into account.
“The advice doesn’t really change, but with the added flexibility at retirement, clients should now be made aware of the implications of drawing down from their pension pot too quickly and depleting it.”
Martin Lines, head of business development at Partnership, says a discussion around why the client needs the flexibility, what they are prepared to pay for it, fund choice and features should soon highlight if your client is a candidate for drawdown.
Claire Trott, head of technical support at Talbot & Muir, says those with larger funds are likely to benefit from a flat fee arrangement such as a full Sipp, whereas those with much smaller funds will be better off in a percentage based product more akin to a personal pension with investment restrictions.
