A study by Royal London has shown that less than half of the people using income drawdown to access their pension pot have a high chance of that income lasting for the rest of their lives.
The latest data from Royal London’s Drawdown Governance Service shows that, while 47% of drawdown customers have more than an 85% chance of their income lasting them for life, the other 53% are in danger of running out of money.
Drawdown, which allows savers to take post-retirement income from assets held in their pension, has become increasingly popular. However, there is some concern that, while there is potential for investment growth, there is also the risk that the value of investment may also fall, potentially leaving some people with a shortfall.
Lorna Blyth, Head of Investment Solutions at Royal London Intermediary Pensions, said: “For some income drawdown customers, income sustainability is not so important as they have high capacity for loss. However, for others it is extremely important that they understand the risks posed by potentially running out of money.”
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