In Focus: Retirement Income  

Why your clients' pensions are at risk

I would argue we are diversifying the sources of risk and the sources of return, while trying to achieve the long-term equity risk. 

FTAdviser: So can the average pension investor mitigate sequencing risk by staying invested, not drawing down, not panicking when markets wobble?

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TS: That sequencing risk is all on you as an investor.

We call it sequencing risk when people are in drawdown, but in reality sequencing risk starts occurring way before drawdown. Because if markets fall dramatically before you retire, you can’t retire - or you can but you will have a very different retirement outcome than before.

That sequencing risk, that worry as an investor, is all on you. Now 4 per cent seems to be a number used as a rule of thumb to draw down from your pot - unless you have enough other savings to use up first and allow your pot to accumulate and use it as a last resort.

But as always, inflation is the silent killer. People do not realise their pensions and savings are at risk because prices are going up. So as a society, as an industry we could do better to help encourage people to make their savings work for them.