Past experience

Income drawdown was introduced in 1995, so it is now possible to look backwards and assess how such plans might have performed through what was, with a benefit of hindsight, a quite mixed investment period, and, at times, very tough for income drawdown investors.

For example, if you invested your income drawdown plan in a mainstream UK stockmarket fund in June 1996, and opted for maximum withdrawals, by June 2002 the annuity you could purchase was nearly 50% lower than that which you could have been purchased in June 1996. Few people could afford such a fall in retirement income, which is why only about 5% of those at retirement choose income drawdown.

For balance, some further comments are required:

Maximum withdrawals will normally require a high proportion invested into stockmarket funds, say 60-70% plus
Research, initial and ongoing, can identify funds with a tendency to do better than average
Some structured products (say, guaranteed capital after 5 years, with return based on 100% of move in FTSE 100 index) will reduce the downside risk while capturing most of the upside potential
Taking smaller withdrawals will allow you to take a much less aggressive investment stance (say 30-40% in stockmarket funds)

The precise approach can vary can widely, depending on individual objectives and circumstances and attitude to risk. That is why you will need to take advantage of an adviser with the qualifications and skills to build a bespoke plan - this is where we can help.

May i take this opportunity for thanking you for looking after my interests. I couldn't have asked ...
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