Columbia Threadneedle calls for automatic drawdown for retirees

Columbia Threadneedle Investments is calling for auto-enrolment into drawdown funds for people nearing retirement.

According to research by the asset manager, people planning their retirement are confused about how they will convert their pensions savings into income, how much they might need in retirement and how long their savings might last.

The firm said that following the implementation of auto-enrolment, a similar system should be implemented for those nearing retirement into a regulated retirement investment solution such as drawdown.

Columbia Threadneedle Investments head of pensions and investment education Chris Wagstaff says: “People are retiring in a perfect storm of challenges and struggle to make informed decisions about how to turn their savings into a secure and appropriate stream of retirement income.

“Auto-enrolment for working people has been heralded as a great success so far. The same principles should be applied to those at the point of retirement, who could be automatically enrolled into a regulated income drawdown fund with a preset investment strategy and income withdrawal rates.”

The poll of 838 adults aged over 55 found that 58 per cent of respondents had retired or expected to retire between the ages of 60 to 69.

Three quarters (76 per cent) expect their retirement to last for 20 years or longer, although a quarter (26 per cent) did not know how long their retirement might last.

Over a third of those questioned (37 per cent) have yet to make a decision on how to convert their pension pot into income, with 17 per cent saying this was because they didn’t trust the pensions and/or investment industry, while 14 per cent said they were not prepared to pay for financial advice.

The research also found that 75 per cent of those questioned believe that an annual gross income below £25,000 would provide a “comfortable” retirement. 

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