MGM Advantage, the retirement income specialist, has asked advisers what the top concerns currently are for clients who are in retirement. Nine out of ten advisers said clients using income drawdown were worried about their fall in income following reviews.
Strategies proposed to clients to manage these falls, which could be as much as 55% according to recent data released by MGM Advantage, include exiting drawdown using investment-linked annuities (61%) and topping up the drawdown pot from other savings the client may have (38%). Phasing an exit from drawdown using annuities accounted for 24% of advisers, while only 19% said their clients were happy to accept the income fall in the hope that markets recover.
The top priority for clients is to preserve income, with 52% suggesting this is a key issue. Falling annuity rates are also concerning 49% of clients, while the background of inflation eroding spending power is a top priority for 38% of people. Only one in four advisers suggested their clients’ top priority was to preserve capital.
- 91% of clients worried about their fall in income following drawdown reviews
- Strategies to manage the income falls include exiting using investment-linked annuities and topping up the drawdown plan using other savings
- Other retirement income concerns include preserving income, falling annuity rates and inflation
Andrew Tully, Pensions Technical Director, MGM Advantage said: “We are in the middle of a perfect retirement storm which shows no signs of abating. Annuity rates tumbling, the global economy in a perpetual state of turmoil, interest rates at historic lows, and inflation higher than the Bank of England target have left retirees wondering what next.
“Advisers are looking at ways of managing their clients concerns, including the use of investment-linked annuities. Our Flexible Income Annuity is one option in the market which offers clients the benefits of a minimum income guarantee, ability to take 120% of income from the start and member and mortality bonuses.”