Unsustainable drawdown rates

k6chris

Saw this. Interesting, though once again it talks about the 4% "Safe" withdrawal rate.


http://www.morningstar.co.uk/uk/news/189130/pension-drawdown-unsustainably-high.aspx


I wonder if a new government might roll back some of the pension freedoms?

k6chris

Sorry, ignore this new thread, I have added it to the existing one. Not sure how to delete this??


Soz

Paul_Herring

the typical pension pot for someone in drawdown is between £80,000 and £123,000.

That's the more worrying figure IMHO...

Albermarle

Better to have £80K to £123K than nothing , as many people have .
If you include people with no private pension the average number drops off a lot . Somewhere around £25K I think .

zagfles

They seem to be assuming these people only have the drawdown pension to live off, which is highly unlikely. A lot of these people will have a DB pension/state pension which haven't kicked in yet, and are using the drawdown pension to bridge the gap until they get them.

EdSwippet

k6chris wrote: »

Saw this. Interesting, though once again it talks about the 4% "Safe" withdrawal rate.
http://www.morningstar.co.uk/uk/news/189130/pension-drawdown-unsustainably-high.aspx

The article's tagline reads:

Average amount being withdrawn from pension pots is close to 9%, more than double the level recommended by experts

Well. Yes. But. This is an average, and as such it says nothing about how people are using these pension pots.

For example, a valid use of them would be to cover an income 'hole' between early retirement and when a final salary pension scheme kicks in. Under those circumstances it is entirely reasonable to draw down at a much faster rate than 4%, because the pension only has to last five to ten years. Similar logic applies where people retire before their state pension becomes payable, or where people have other assets that will fund them through later retirement -- ISAs, buy to let, inheritance, and so on.

Paul_Herring

Well. Yes. But. This is an average, and as such it says nothing about how people are using these pension pots.

Or whether said pot belongs to people who have other pots (which could also be applied to my previous comment...)