Prior to pension freedoms virtually all retirees, with a defined contribution (DC) pension, used their savings to buy annuities to provide themselves with a retirement income. Only a small number of wealthy (often financially sophisticated) retirees used income drawdown. There were rules governing the amount of income that could be taken, a requirement for regular reviews and access to advisers. Capped drawdown, as it is now known, ceased for new retirees after April 2015. Drawdown has now become the most popular option for accessing pension savings with nearly three times as many new drawdown accounts being than set up as annuities purchased since October 2015.
A consequence of the sudden way in which pension freedoms were announced in the 2014 Budget and introduced in 2015 is that a supporting regulatory environment was not in place and remains, for the most part, inadequate for the challenges consumers now face when making potentially life changing financial decisions.
- To be an ongoing working party and act as a source of knowledge and expertise within the Institute and Faculty of Actuaries (IFoA) on drawdown.
- To initiate proposals and respond to consultations on regulatory change
- To review existing strategies for managing drawdown for income and the tools currently available
- To recommend best practices for:
- managing income drawdown
- considering the option and timing of annuity purchase
- consumer communications
- To publish papers/presentations covering current practice and working party’s recommendations. The first paper or presentation to be released by the end of June 2020.
- To present findings and results at IFoA and industry conferences.
- 9 November 2017
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