Personal PensionMay 16 2013

Scottish Life tool aims to offer drawdown options

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ByKevin White

The provider’s business development manager said its adviser support tool - which uses stochastic modelling to map out an individual’s potential investment scenarios, could assess the sustainability of a drawdown strategy to ensure it lasts throughout retirement.

She said: “Traditional retirement is changing, and people need more flexibility when it comes to their retirement options. Taking an annuity immediately on reaching 60 or 65 is not the right option for every client.

“With people living longer in retirement, income needs change over time, and annuity rates are around the lowest levels in 20 years.

“Income drawdown can be useful as a flexible alternative for many people, and the increase in the maximum drawdown level to 120 per cent of GAD rates is all well and good, but our view is that providers and advisers need to focus on sustainability.

“There is a huge opportunity for advisers in this market, and we believe that this tool can help them get the best possible situation for their client.”

Adviser View

Tim House, director of Wiltshire-based Golden Gate Financial Planning & Wealth Management, said: “I’m quite conservative when it comes to drawdown, and would be reluctant to have my clients at 120 per cent of GAD anyway, but I can see how it could be useful. However, in my experience, the majority of my clients who are looking at drawdown derive their retirement income from various sources, and don't just depend on one source.”