One in 20 (5 per cent) Interactive Investor customers entering drawdown in the year since Investment Pathways launched said they would consider one of the four options it offered, the financial services company revealed.

Furthermore, of the customers considering using Investment Pathways, only 1 per cent went on to purchase one.

Interactive Investor offers four different pathways for customers with different priorities, depending on how much interaction they plan to have with their finances in the near future.

Among those who have chosen a pathway instead of their previous investments, the most popular choice has been Investment Pathway One, whereby the customer had no plans to touch their money in the next five years.

This was followed by Pathway Three, which is for those planning to start taking money as a long-term income within the next five years.

Interactive Investor customers are yet to take up either Pathway Two, where they plan to use the money to buy an annuity within five years, or Four, where they plan to withdraw all their money within five years.

The Financial Conduct Authority implemented pathways to reduce the number people withdrawing their retirement savings from their pensions and keeping it all in cash, where it faces the effects of inflation.

Of the six million people aged 65 and over who have ISAs, more than three million have cash ISAs, according to a recent FOI request by LCP.

At the time of launch, Interactive Investor expressed support for the initiative, but also doubted that the scheme would be appealing for its self-directed customer base.

Interactive Investor head of pensions and savings, Becky O’Connor, said “Our initial theory that Investment Pathways were unlikely to be popular with the majority of our pensions customers appears to have been proven correct.

“We continue to support the principle of the initiative but would urge the FCA, with one year of industry data under its belt, to consider reviewing the pathways options as they stand, as it appears that Pathways Two and Four in particular are not even piquing the interest of a small minority of our customers, suggesting that very few people plan to take an annuity or take out their whole pension in the short term.

“It makes sense that Pathways One and Three would be the most relevant.

“The reason someone might plan to start taking an income within five years or after five years might depend on their age, work status, salary and pension pot size.

“Many of our customers who are 55 or older have relatively large pension pots and are likely to be drawing down an initial lump sum for a particular purpose with no wish or need to touch their Sipp again for some time and so in this context, Pathway One might make sense.

“That said, some who perhaps wish to retire early, in their fifties, might choose Pathway Three to facilitate early retirement.”

The low uptake, together with evidence of a preference for just two of the four pathways, suggested that the scheme was “ripe for review” on its first birthday, according to Interactive Investor.

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