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&#39Safe drawdown can bring boost in market rise&#39

Current economic conditions make investing in income drawdown now safer than ever, claims the Income Drawdown Bureau.

It says the Equitable Life and corporate accounting scandals have scared investors into shunning the stockmarket and instead put their money into annuities, which they see as safer but it says they should also now consider drawdown.

The bureau claims drawdown is an attractive option as it allows investors to benefit from recovering equity markets. It also points out that as the amount of income people can draw down has been limited to 25 per cent over the last seven years, funds require a lower investment return to maintain the income they provide. This, it says, makes income drawdown a safer option for investors starting off today.

It recommends reducing the amount drawn as a useful tool to maximise the invested value and also to reduce the amount of tax paid.

Director Ronnie Lymburn says: “Too many people with sizeable funds who have been hit by tumbling equities in the run-up to their retirement are locking into fixed conventional annuities, thereby ensuring they have no hope of participating in any stockmarket recovery.

“While they have good reason to be cautious, by structuring a portfolio with a range of assets drawdown can be a very sensible option. Additionally, new investors have a lot to gain from the attractive death benefits offered but also from the impact of the current economic climate which has actually made income drawdown a safer bet.”

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