Hargreaves Lansdown has launched a retirement modelling tool that compares the income from annuities and drawdown, “at a glance”
The tool will give real-time figures, offer automated underwriting for health and lifestyle, and put current income limits for drawdown next to open market annuity rates.
According to Hargreaves Lansdown, around a third of a million people will need to convert defined contribution pensions into tax-free cash and income between now and next April, after chancellor George Osborne proposed scrapping drawdown limits and the need to buy an annuity.
As it currently stands, the government has cut the income requirement for flexible drawdown from £20,000 to £12,000 and has raised the capped drawdown limit from 120 per cent to 150 per cent. However, the limits are likely to be scrapped altogether from April 2015.
The firm’s own research showed that 94.2 per cent of 1,500 retiring investors still see secure income as ‘very’ or ‘quite important’, but stated that savers do not need to rush into buying an annuity and can take a temporary position using an income drawdown plan invested in cash.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said the industry is in danger of going into meltdown at the moment, trying to deal with so many regulatory and legislative challenges at once.
He said: “The problem is, every day thousands of ordinary pension savers come up to retirement and they need to be helped to make good decisions now.”