View more on these topics

Govt has overestimated risk of drawdown, says Skandia

Skandia claims the probability of outliving the flow of income from drawdown products is very low and says fear is standing in the way of fundamental annuity reform.

Its research found that, for a pensioner aged 60 with a fund of £100,000 taking income that matches 80 per cent of an open-market annuity, there is a 0 per cent chance of running out of income before death.

If a pensioner takes 100 per cent of what they would get from an open-market annuity, the chance of running out of income is 34 per cent.

Skandia says this shows that as long as there are effective controls over income levels and regular reviews, drawdown clients are not likely to outlive their income.

Group marketing manager Peter Jordan says: “The Government has stated its concerns about the risk of outliving income but it does not seem to have analysed it in any depth. This fear is getting in the way of having a more fundamental rethink.”

But other providers have hit back at the findings, saying drawdown is too risky for most people.

Britannic Retirement Solutions head of corporate affairs Jim Boyd says: “Drawdown is very high risk and is inappropriate for the vast majority of people. It involves a complex relationship between equities and interest rates. That £250,000 is used as a benchmark for drawdown gives an insight to its level of risk.”

Recommended

Annuity private member bill reaches committee stage

Conservative MP David Curry&#39s private member annuity reform bill will have its committee stage on February 14, where it will be debated and amendments raised by MPs from all parties.Following the Opposition&#39s victory over the Government at second reading of the Bill a month ago, this is the next stage in the parliamentary process for […]

Call for FSA to lighten regulation

The FSA should introduce lighter regulation on some products for life offices with Raising Standards accreditation or face the public abandoning the industry, says CIS.General manager (life and compliance) Mike Fairbairn says the FSA should slacken rules on certain products and exempt accredited firms.Without some form of cre-dit rating for firms based on the Raising […]

Standard Life kicks off premier SSAS

Standard Life has introduced the premier small self-administered scheme (SSAS), which is part of Standard Life&#39s single charged occupational pension range.This SSAS initially provides access to 20 Standard Life funds that cover areas such as UK equity, European, property, fixed interest, Far Eastern and ethical funds. There are also eight external fund links from Deutsche, […]

Mortgage borrowers turn to advice

Mortgage borrowers are increasingly seeking quality advice when looking for a homeloan, according to research by the Mortgage Code Compliance Board.The regulator says more and more borrowers are ignoring low headline rates and the brand names of lenders when shopping for a mortgage and instead seeking the services of a quality broker or IFA.The MCCB […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment