Pension provider Zurich has today (1 December) launched a non-advised drawdown proposition, which it said will give greater flexibiltiy to workplace customers who want to take advantage of the pension freedoms but don’t want to take advice.
Zurich said more than 200,000 of its workplace members will benefit from the new option which is being rolled out to schemes this month.
FTAdviser reported in July that Zurich was originally planning to launch this proposition in the third quarter.
Non-advised drawdown will be available to workplace members with a retirement pot of at least £30,000, the firm said.
Additionally, tt includes the option to take tax free cash or tax free cash with regular and/or one off income payments, and charges will vary depending on the features of the customer’s existing scheme and individual fund selection.
Zurich added corporate scheme members who are not currently on the corporate savings platform can access drawdown via a transfer.
Rod McKie, Zurich’s head of retirement propositions, said: “We continue to believe that financial advice is the best way to help most consumers achieve their desired outcome in retirement.
“However, experience from the first six months of the pension freedoms has shown that a sizeable number of customers feel confident about making retirement decisions for themselves.
“While we remain fully committed to the adviser market - and recommend that customers seek advice or at least guidance from Pension Wise - there is an appetite for non-advised drawdown and making this option available to our workplace members will help them take full advantage of the pension changes.”
Ben Smaje, managing director at Kennedy Black Wealth Management, said: “There are plenty of pitfalls for people managing their own drawdown and the long term consequences can be serious.
“I think clients should always seek advice on drawdown particularly when things get complicated. There are a lot of subtleties to drawdown which people aren’t aware of if they aren’t taking advice.
“Zurich will be taking on a lot of obligations - as the provider there is an obligation to put clients in an informed position. It is a fine line betwen guidance and advice.”
Lee Clarkson, managing director at Spires Independent, said: “On the whole, I believe that offering the ability for drawdown is a good option and should result in greater understanding for consumers of the options available to them,
“However the fact that most corporate pensions of this ilk are unitised pension policies and as such do not provide a natural income therefore income will have to be achieved through the sale of assets.
“So I am fearful of the fact that the effects of negative pound costs averaging will detrimentally ravage the pension pot leading to a swathe of pensioners levying accusations against Zurich who will deny culpability as it was non-advised.”
In September this year, Prudential launched a non-advised personal pension and drawdown product, which aims to give savers access to the full range of pension freedom options while catering for those who “feel they do not need the help” of a financial adviser before choosing income drawdown.
ruth.gillbe@ft.com