Jan Holt of retirement specialist Just Retirement told a conference today that income drawdown plans - likely to be a key replacement for annuities post-Budget - needed annual reviews for "most people" to avoid clients running out of money.

In a keynote speech on income drawdown benefits and risks at the 2014 IFP Paraplanner Conference today, Ms Holt, head of business development, said that income drawdown was likely to become more popular post-Budget but it was essential that there was a robust review process in place to prevent the danger of clients being left penniless in later life.
She warned that too many people considered income drawdown as a one-off decision but it actually required annual review as clients' needs changed. This was essential to manage risk and volatility and avoid clients running out of funds, she said.
She said that income drawdown was not the final word on retirement and told Paraplanners she saw a decade post-retirement for many clients when you "start to bring clients out of drawdown." She said for some clients opting back into an annuity at a later age would be the right thing to do depending on circumstances.
Annuities would remain important for many clients, she said, especially those reluctant to take on risk and those for whom annuities could be a better deal.
She said, for example, that 60 to 70 per cent of Just Retirement clients qualified for an enhanced annuity and annuites would remain a key part of retirement planning for a long time to come.
She told delegates that if income drawdown was going to be more widely used, as was likely post-Budget, it was vital to have regular and robust reviews to ensure clients did not run out of money in retirement.
She said: "We think the reviews should be frequent and mostly annual for most people."
Reviews were not just optional but a HMRC requirement in retirement, she said, although regulation generally had some catching up to do on post-retirement advice.
She said: "The review process helps client manage their drawdown and it's also a HMRC requirement to avoid depleting funds."
She said that a research study for JR suggested that some clients may be staying in drawdown longer than was good for them, for example if their health deteriorated and an anuity might be a better option, and this underlined the need for annual reviews.