This report from the FCA highlights that since the pension freedoms, people do seem to be using all options available in the new freedoms; taking cash, using annuities and drawing down.
This has been our experience too, with a number of clients wanting to use annuities to cover essential spend and then relying on income drawdown for more flexible income needs.
It is essential however, that as well as understanding the different choices under the pension freedoms; which to use and in what proportion, staff are made aware of what to look for and how to find and select both the best annuity and drawdown solutions for their circumstances and needs. Employers can help with this by providing those approaching retirement with financial education and access to advice.
The FCA has today published its latest Retirement Income Market Data which covers 95% of the defined contribution contract based pension scheme assets. In the quarter July to September 2015 178,990 pensions have been accessed by consumers to take an income or fully withdraw their money as cash. • 60,600 (34%) used uncrystallised fund pension lump sum (UFPLS) (both partial and full withdrawals) • 54,604 (30%) used income drawdown (both partial and full withdrawals) • 23,385 (13%) were used to purchase an annuity • 40,401 (23%) were full withdrawals using small pot lump sum payments This comes on top of 204,581 who accessed their pensions in the first quarter of 2015/16, giving a total of 383,571 people who have accessed their pensions since the start of the tax year.