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Article: INCOME DRAWDOWN RESULTS; Pension funds that were heavily invested in equities during drawdown have collapsed in value. Will Hadfield looks at the results of typical investment strategies and shows how to create an asset mix to produce a given level of income for the minimum amoun.
- Article from:
- Money Management
- Article date:
- March 1, 2003
CopyrightCOPYRIGHT 2003 FT Business. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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A pension fund in drawdown is a risk product. Those who are now suffering from a decline in their standard of living in retirement after several years of drawdown did not understand the inherent risk involved.
In 1995, the legislation enabling income to be taken from pension funds without purchasing an annuity came into force. Personal and occupational money purchase schemes could be vested without having to buy an annuity that locked in a low real rate of return for the rest of the policyholders life.
There was the additional benefit that funds in drawdown did not disappear into the pooled assets of the pension provider when the policyholder died. An ...