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IFAs warn drawdown clients are sleepwalking into disaster

Income-drawdown customers who are not getting regular independent advice are sleepwalking into disaster, warn IFAs.

Advisers argue that many of the people who went into income drawdown when it was introduced seven years ago are now in their early 70s but some are not getting annual reviews.

IFAs are concerned that unserviced drawdown customers risk missing out on buying good-value annuities and at worst could find themselves locked into a poor-quality annuity with their drawdown provider when they hit the compulsory deadline at the age of 75 to buy an annuity.

The PIA started a review of the post-drawdown market in 1999 but the FSA is not expected to issue new regulations for at least another year.

Intelligent Pensions director Steve Patterson says: “If people drift into the abyss of being in the wrong funds and are forced to buy in an adverse market, they could be in trouble. People who went into drawdown several years ago are sleepwalking into disaster when they hit 75 and have to buy an annuity.”

The Bureaux director Ronnie Lymburn says: “There are cases where an adviser has had his commission and does not want to be proactive about making sure that reviews happen. I do not think that is good enough.”

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