Flexi-access drawdown represents the biggest risk when it comes to post-Budget pension withdrawals, warn advisers.
A survey of 836 advisers conducted by Old Mutual Wealth on behalf of Money Marketing reveals 44 per cent of advisers think flexi-access drawdown is the most risky option for customers accessing their pensions from next April.
Only 31 per cent thought annuities were the biggest risk while just 25 per cent were most concerned about uncrystallised pension funds lump sums – the new cash withdrawal option.
The survey also found a lack of support from advisers for the backstop concept, where there are extra safeguards for people who do not take up the guidance guarantee or use an adviser. Just 40 per cent backed the idea.
Only 16 per cent of advisers predicted the guidance would not lead to a greater take-up of financial advice.
Old Mutual Wealth retirement planning expert Adrian Walker says: “We believe the guidance guarantee partners should be signposting to full advice. However, it remains to be seen how many of those individuals approaching retirement choose to take advantage of the service. Poor take-up will limit the number of referrals advisers pick up as a result.”
Advisers are also in favour of inheritance tax reform, the survey found. Nearly half of advisers (44 per cent) want the IHT threshold lifted to £1m, up from its current level of £325,000, while 28 per cent think the primary home should be excluded. More than one in ten (11.5 per cent) would abolish the tax entirely.
Old Mutual Wealth financial planning expert Rachael Griffin says: “The problem with IHT is that many individuals caught under the current £325,000 threshold will feel they are leaving a relatively modest inheritance to their family and yet it will be subject to a tax which is ostensibly supposed to target wealthier individuals. Advisers appear to feel the same way, with the majority supporting IHT reform and only a small number arguing that nobody should pay IHT.”