One of the dilemmas in retirement planning is that annuities are a complex product to price and construct but provide certain outcomes, whereas drawdown is a relatively simple product but produces uncertain outcomes. One of the keys of reducing the uncertainty of drawdown outcomes is to understand and manage the sequence of returns risk.
Billy Burrows is director of Retirement Intelligence
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Key points
Pension freedoms removed the annuity handcuffs and opened the door to drawdown for the mass market.
Many advisers and their clients have been tempted to take the same income from a drawdown as they could have taken from an annuity.
People retiring at the moment are between a rock and a hard place: low interest rates and volatile stock markets.
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