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BlackRock says 25% of assets flow into drawdown

BlackRock says 25% of assets flow into drawdown

More than a quarter of the assets flowing into BlackRock’s bundled defined contribution business since 6 April have been designated for drawdown, in particular its new Retirement Income Account.

Since the pension freedoms were implemented, the bundled DC business has seen 2,103 people over the age of 55 access their pension savings, representing total pension assets of £27.8m.

Of that, 26 per cent, or just over £7m, has flowed into the new drawdown offering, from 3 per cent of retirees (or 65 people).

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Another 19 per cent of assets, £5.2m, opted for annuities, from 6 per cent of members (or 117 people, with the remaining 55 per cent of assets being drawn as cash by 91 per cent of people.

BlackRock also revealed that 61 per cent have accessed the government’s Pension Wise guidance service, with 36 per cent of people seeking advice from a regulated IFA, while 23 per cent sought counsel from both.

Paul Bucksey, head of the firm’s DC business, said there has been a dramatic shift in investor behaviour six months into the new pension freedoms.

“For those with substantial retirement savings and investments, our flexi-access drawdown product is proving very popular,” he added.

The Retirement Income Account allows the account holder to select regular or ad-hoc income payments, made by selling units in the funds held by the account holder and drawing down capital over time.

Last month, the Financial Conduct Authority’s analysis of pension freedoms data found that across all firms - particularly among the largest 15 firms in the sample - the most popular options in the early months have been uncrystallised fund pension lump sum full encashment and income drawdown.

The regulator’s figures found that of customers aged 55 or over who have accessed their pension since 6 April, a total of 57,568 went for full encashment via UFPLS.

Partial encashment via drawdown was a close second with 53,543 customers, followed by 43,094 going for small pots payment.

peter.walker@ft.com