Pension reforms trigger drawdown activity boost

This surge of activity highlights the fact that advisers are demonstrating the value of having paid-for advice.

Drawdown usage has been gradually increasing following the pension reform announcements. This interest in drawdown, as witnessed by Selectapension, is echoed in recent industry research that found more than a third of Advisers who would have recommended annuities prior to the pension freedoms announced at Budget 2014 are now reviewing income drawdown options for some clients.

However, this rise of drawdown activity did not occur immediately after the Budget. In the four weeks following the 19th March, activity plateaued on the calculators, suggesting that Advisers took stock before making any firm recommendations to clients regarding their retirement plans. Selectapension witnessed a first uplift in activity at the beginning of June, reaching an all-time peak in July.

Andy McCabe, Managing Director, Selectapension commented:

“As the impact of the 2014 Budget reforms takes hold, Advisers will need to grasp the opportunity to demonstrate the value of professional, paid-for financial advice amongst a new landscape of free guidance and access to larger cash lump sums. A sizable proportion of Advisers are doing this already by investigating alternative retirement routes and we expect more to follow.”

Income drawdown has increasingly been on the radar for advisers.  A year on year analysis of the technology provider’s drawdown calculators found a 52% rise in advisers using their drawdown tools. This trend looks set to continue due to consumers’ longer life expectancy, and the move away from annuities. 

Mr McCabe continued:

“To be on top of the game, Advisers should look to maximise the newest technology that is available to them to ensure they are securing the best outcome for their clients. By allowing technology to do the heavy-lifting, industry professionals can concentrate on building their client relationships.”