Flexi-access drawdown – The good, the bad, and the ugly

We’re seeing more people using income drawdown than ever before with Flexi Access Drawdown (FAD) sales outpacing annuity sales by more than 2:1 since pension freedoms began, but FAD is not without its risks. The most significant of these is that people will run out of money during their lifetime through poor investment return, living longer than they anticipate or simply withdrawing at a rate which is unsustainable. We consider the Retirement Outcomes Review (ROR) from the FCA, and the changes to at retirement advice in the wake of the final report and subsequent policy statements. While recent output from the FCA regarding the ROR has focused heavily on non-advised drawdown, it gives the industry a line of sight to the regulators thinking. In the absence of significant post RDR guidance from the FCA on what good looks like in advised FAD, these publications provide an insight into the regulators main concerns in this market. The presentation investigates best practice in FAD file construction, as well as exploring the complex issues of sequencing risk and sustainable withdrawal rates. The presentation is bought to a close by considering how to review income drawdown plans in a compliant and cost effective manner, which we believe is vital for the ongoing success of any plan. Learning outcomes • Be able to identify the risk factors associated with income drawdown. • Understand the Regulator’s main concerns with income drawdown. • Understand how you can review your client’s drawdown plan in a compliant and cost effective way. Speaker bio: Craig Muir, Senior Pension Development & Technical Manager, Royal London Taking up a role as an Intermediary Development & Technical Manager at the start of 2011, Craig is a specialist in interpreting and explaining changes to the pension rules and regulation. Craig is involved in developing adviser facing content, presenting, writing articles and commenting for the press.