Blackrock has entered the drawdown market by offering customers in its defined contribution schemes access a new income option to access retirement freedoms.
The firm has now launched the Blackrock Retirement Income Account for the 195 workplace pension clients in the UK, to offer scheme members an income alternative to annuities.
The facility is the company’s first offering for people entering retirement beyond traditional mutual funds, investment trusts and exchange-traded funds.
The account allows the account holder to select regulor or ad-hoc payments. Payments are made by selling units in the funds held by the account holder and drawing down capital over time.
Account holders will be able to access a multi-asset core fund, LifePath Flexi, but can also create their own personal portfolio from a range of around 100 investment funds from Blackrock and other leading managers.
It aims to provide a low-cost and straightforward option for retirees in schemes managed by Blackrock, following new pensions freedoms introduced on 6 April.
There are no set up, transaction, or exit fees, and if the account holder wishes to stay in the same investment fund or funds, there is no charge for transitioning their account from their workplace scheme to the Blackrock Retirement Income Account.
There is an annual management charge which covers account administration and fund charges. The annual management charge to use the core fund, LifePath Flexi, is 0.41 per cent of funds under management.
The fund manager added that it believes drawdown will be “popular” with retirees looking to take advantage of the new freedoms.
According to Blackrock research, 13 per cent of 55-74 year olds, who are not fully retired, intend to stay invested in their pension plan and take annual withdrawals to minimize their tax liability.
However, 28 per cent indicated they were undecided about what to do after new pensions freedoms were introduced.
Paul Bucksey, head of UK DC at Blackrock, said, “We have seen a raft of new fund launches within the industry to cater to new pensions freedoms, but we believe this innovation provides our members with a simple, flexible and cost-effective way of moving from the accumulation phase of workplace pension saving to decumulation.”
donia.o’loughlin@ft.com
