Advisers plan to opt for simple drawdown for their clients when the Budget at-retirement reforms come into effect from next April, according to new research from Suffolk Life.
The self-invested personal pension operator surveyed 211 advisers last month and found that 70 per cent said they would use flexible access drawdown for their clients, to provide a level, regular income, after taking all the available tax free cash as a lump sum.
This was confirmed by 73 per cent of advisers stating that they would be unlikely to recommend income increases over the current Government Actuary’s Department limit for investors already in capped drawdown.
Advisers also expressed limited support for the new ‘uncrystallised fund pension lump sum’, with fewer than 30 per cent suggesting they would recommend it for their clients. This is one of three options for savers to access their pension that HM Revenue and Customs unveiled last month.
Alongside placing a fund into ‘flexi-access drawdown’ or taking a lifetime annuity, this new option allows savers to take lump sums from their pension after the age of 55, without crystallising the pot.
Those surveyed by Suffolk Life did however welcome the introduction of a new annual allowance for clients in flexible access drawdown, although 70 per cent said that fewer than a quarter of their clients would be likely to continue to make contributions whilst drawing income.
Greg Kingston, head of marketing and proposition at Suffolk Life, said: “The new rules for pension income post April 2015 bring a bewildering array of choices for advisers and their clients, but at this stage it appears that demand for some of them is relatively limited.
“Part of that may be due to very few providers to date being willing to confirm what options they will support. That makes it very difficult for advisers to select a provider today in anticipation of making the options open to their client next April.”
