View more on these topics

Defining and evidencing Sustainable Withdrawal rates


Sustainable withdrawal rates (SWR) have become a core advice issue for advisers with retirement clients, following the shift from annuities to drawdown.

There are many methods for articulating what the SWR rate could be, but how is this evidenced when everyone’s needs are different?

Decumulation requires a different strategy to accumulation. Ironically, in this age of pension freedoms, sustainable income requires controls in place. Many advisers are considering a Centralised Retirement Proposition (CRP) for this purpose.

A CRP could be described as a de-risked decumulation strategy, deploying measures to articulate and evidence the moving parts of a sustainable withdrawal rate.

Every client will have their own requirements, savings, liabilities, and views on what risks are acceptable. It will be different for everyone, and so everyone will have their own SWRs.

There are two elements to defining sustainable withdrawal rates:

1. Define income split between essential and discretionary spending.

2. Understand and establish the ‘controls’. There are several moving parts that define the SWR for each income stream.

Once budget planning is carried out, the next stage is to consider the ‘controls’ for each income stream:

Time Horizon – How long is the income needed for?

Inflation assumptions – Level or CPI/RPI linked

Portfolio asset allocation – This considers the degree of equity exposure that is supporting the income stream.

Fees and Charges – Impact of platform fees, fund charges and adviser fees.

Probability of success – Defines the desired probability of successful outcome for each income stream.

If we imagine these controls as dials, and set them in different positions, we get different SWR figures aligned to the respective income streams.

The final step is to calculate the capital to support the income levels needed at the defined sustainable withdrawal rates.


Evidencing a Sustainable Withdrawal Rate is just one part of managing a client’s retirement funds. Developing a de-risked decumulation strategy that’s robust and repeatable is worth considering as there could well be a tsunami of retirement clients just waiting to switch income on. This is heading our way, and advisers need to be ready.

Tony Clark, Proposition Marketing Manager, Just

Read our new think report De-risking-decumulation to help clients descend safely


arnie ppi

Lloyds prepares for PPI claims rush ahead of deadline

Lloyds is reportedly planning to bolster its provision for payment protection insurance costs as consumers move to lodge complaints before the August 2019 deadline. According to The Times, analysts at UBS understand Lloyds could add £410m to its provision for April to June. Lloyds has incurred £18.8bn of PPI costs and increased its provision by […]

M&G boss exits in leadership reshuffle ahead of Pru demerger

M&G Prudential has revealed a raft of leadership changes ahead of its demerger from Prudential. M&G Prudential was formed in August last year through the merger of asset manager M&G and Prudential’s UK and European life business. Among the changes announced today are that M&G Investments chief executive Anne Richards will leave the company to head […]

British Pounds in a Mouse Trap

Network to compensate after Ucis advice

Adviser network Online Partnership Limited has been ordered to compensate a former client who was advised to invest a large portion of his self-invested personal pension into two unregulated collective investments. The Financial Ombudsman Service has upheld a complaint from Mr D that was made in response to unsuitable investment advice that he felt did […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm