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Drawing on a pension pot

Enables’ IFA’s in Bishop’s Stortford have witnessed many savers In recent months enjoying their pension with buoyant stock markets driving investments to new highs, but some experts are warning that this may be tempting some into decisions they could regret.

Pension drawdown has soared in popularity since April 2015, when the new freedoms for the over-55s gave them full control over their pensions, freeing them from the obligation to buy an annuity. Since then hundreds of thousands have shifted their pensions into drawdown, which involves leaving their money invested and drawing regular sums to top up their retirement income.

The Association of British Insurers figures suggest another 7,000 sign up to income drawdown every single month, but they have done so in times of record returns on the stock markets. Experts now fear that some may have underestimated the risks of a stock market crash, which would savage the value of their pensions.

Global economic uncertainty has slowed stock markets and retirees who had already been locked into an annuity despite today’s low income levels are more protected from share price shocks because they will continue to get a fixed income regardless.  However, those in income drawdown are directly exposed to market volatility and if markets fall, so will the size of their pension pots.

Billy Burrows, director of pension advisers Better Retirement, says drawdown savers need to be aware of the dangers: “The stock market is still trading near its all-time high, but there may be trouble ahead.” If you would like to look at how to make your retirement funds work best for you we are always happy to talk.

http://www.express.co.uk/finance/personalfinance/823753/retirement-pension-pot-age-personal-finance-advice-tips

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