Drawdown - when did it really commence?

wary

I was recently given a “success story” case study by an IFA detailing a client’s pension drawdown, commencing in 2002 aged 65, and listing annual drawdown figures of up to £70K.

I thought drawdown is a relatively new concept and before then, one was largely forced down the annuity route. He reckons that this is a common misconception, and the recent rule changes simply provided more freedom & flexibility.

Please can someone clarify? Thanks

robber2

Drawdown (with greater restrictions than today) has been avialable for a limited number of people for the last 20 years.

greenglide

The recent tweaks (it was no great changed, just claimed yet again to give access to their money) basically removed the necessity to have a given level of secure income (basically annuities, DB pension) to withdraw anything other that the GAD rate.

Flexible drawdown and capped drawdown they were called. It made much more sense than the maniac changes - you could access all the money if you showed you had an income to keep yourself.

Not ideal but neither is the present regime with a population which, generally, doesnt know what to do with capital.

dunstonh

I thought drawdown is a relatively new concept and before then, one was largely forced down the annuity route. He reckons that this is a common misconception, and the recent rule changes simply provided more freedom & flexibility.

It became more popular after 2006 but it did exist before then. Drawdown is certainly not a new option. However, it was originally only available via IFAs and with larger pots. The changes in 2015 just increased flexibility and didnt really bring in that much in the way of new options. It just made them mainstream and more accessible.

mania112

This year you have been able to buy a Lamborghini via Income Drawdown, previously it was only an old Cortina.

greenglide

This year you have been able to buy a Lamborghini via Income Drawdown, previously it was only an old Cortina.

If you were in receipt of a DB pension or an annuity paying £20,000 or more (flexible drawdown) you have always had the Lamborghini option. Less than £20,000 (capped down) a Cortina was really the only option.

This was only available if you had a DC pot to drawdown from while maintaining the income at £20,000.

It was the annuity problems that came with low interest levels, low inflation and quantitative easing that upset it but this wasnt (IMHO) the correct fix for the issues with annuities. I am not sure what is the right fix but giving the whole cookie jar to the kids has major issues when they have gobbled them all up.