Drawdown pensions may not be the golden ticket to a happy retirement, the head of Pension Potential has suggested.
Speaking to FT Adviser, chief executive of Pension Potential Steve Butler, warned: “There are no guarantees with drawdown. You could run out of money altogether.”
His comments came following the launch of National Annuity Day on October 21 and the release of a 12-page report titled ‘The Annuity Blind Spot: why UK retirement security is at risk’.
As reported by FT Adviser, the study found that women were on track for worse retirement outcomes than men, largely owing to a lack of knowledge about pensions options.
Butler said: “By educating the public and supporting advisers, we can help people see annuities as a practical, low-risk way to boost retirement income.
“Closing this knowledge gap will help more people achieve financial security and peace of mind in later life.”
However, FT Adviser readers said annuities were not the only solution.
One reader, former adviser at Intelligent Pensions, David Trenner said there was more to pensions than just annuities.
While acknowledging that an annuity can suit specific retirement needs, and that the best solution is often to hold an annuity and a drawdown, Trenner said: “The Open Market Option is essential to get the best rate, not that offered by the holding insurer.”
National Annuity Day came at a difficult time for savers. Separate research by TELUS Health indicated that 25 per cent of workers have cut back on saving and investments.
‘There are no guarantees with drawdown. You could run out of money altogether.’
The National Annuity Day report, based on a YouGov survey of 2,058 adults, noted that annuity sales increased by 34 per cent to 7bn in 2024.
However, separate GOV.UK statistics show that total annual workplace pension saving for 2024 amounted to £149.7bn.
Gwen Haggo, savings and retirement sales director for LV, said she supported National Annuity Day.
“Annuities are regaining relevance as retirees seek certainty in an unpredictable market”, she said, adding that awareness “remains low”.
Haggo added: “Advisers are uniquely positioned to deliver this guidance and bridge the knowledge gap.’”
Readers were still unconvinced that the disparity between annuity uptake and other workplace pension savings justified a dedicated awareness day, however.
Commenting on the news, Trenner said: “We don’t want a National Annuity Day any more than we want a National Drawdown Day.”
