‘Avoid retirement income silos’ – Fidelity

‘Avoid retirement income silos’ – Fidelity

Eugene Philalithis, a portfolio manager for Fidelity Worldwide Investment, has noted demand for structured income as the pension changes draw closer.

But Mr Philalithis, team leader for fixed income and alternatives research, told the Fidelity Managing Income in Retirement Seminar in London last week producing income was becoming harder because of poor yields.

He said: “We are seeing a demand for structured income because of these pension changes, but it is harder because yields are so low.

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“So we need to look beyond cash, government bonds and high-quality corporates.”

His comments came as Richard Parkin, head of retirement, said people in retirement could use various strategies to achieve an income but might not consider this.

He said: “The best retirement plan for most people is going to be a mixture of things such as annuities and drawdown, probably at different times.

“There is a real danger that people consider their retirement in silos.”

Adviser view

Mike Pendergast, director of Cheshire-based Zen Financial Services, said: “You can see a scenario where people use drawdown for a period or release some tax-free cash, and then go to an annuity, but I do not think people are aware of this. It is the adviser’s job to educate them.”