45% of people entering drawdown not taking income

Only 55 per cent of those entering drawdown have taken an income, with 45 per cent simply taking the tax-free cash sum, new analysis from Hargreaves Lansdown has revealed.

The research also found that only 40 per cent of those taking an income do so straight away, with 40 per cent of those who delay their income waiting at least six months, and a further 24 per cent waiting at least a year.

Commenting on the findings, Hargreaves Lansdown senior analyst, Nathan Long, said: “The swift introduction of pension freedom left many braced for a drawdown shaped catastrophe – taking too much income, too quickly.

"But our research shows that most people aren’t being too quick on the drawdown. Instead they’re separating the decision to start drawing income from taking tax free cash, which is a very sensible approach.

“Those that opt for income are taking their time to settle on the amount of income they draw, and are using the new flexible rules to mould their pension to fit their circumstances as they gradually transition into retirement - only around 1 in 10 people leave work in the year they reach state pension age.

“The evolution of the market and the regulation that oversees it needs to help consumers get timely, helpful, personalised information so they can make the decisions that are right for them.”

The Financial Conduct Authority (FCA) announced new investment pathways for drawdown providers and customers in mid-2019 following its Retirement Outcomes Review, which looked at the importance of sustainable income solutions and ensuring those using income drawdown have sufficient information and support.

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