The study found that 41% in drawdown are withdrawing the same amount from their pension regardless of how the stock market performs.
In a statement released on 27 June, a Zurich spokesperson said: “With more than 431,000 retirees using income drawdown to fund their retirement, this means as many as 176,000 people could be impacted.”
The research was based on a YouGov survey of a UK sample of 742 people who have moved into drawdown since the pension freedoms were introduced in April 2015.
Warning signs
Zurich believes the results of the study are “early evidence” that consumers may not be aware of the need to consider adjusting their income in choppy markets, putting them at risk of outliving their retirement savings.
“Since pension reforms were introduced, twice as many retirees are choosing to keep their pension invested and draw a regular income rather than buying an annuity. This means the value of their pot can rise or fall in line with the stock market,” Zurich said.
Lacking experience
Additionally, the study further found that a third (32%) of people using drawdown have no hands-on investment experience and two in five (41%) have not received either financial advice or guidance.
A further 29% claimed they were confident in their investment decisions, despite having no previous experience of actively investing.
Safe withdrawal rates
To help consumers manage their retirement savings, Zurich wants the UK Government to publish safe withdrawal rates for retirees in drawdown.
In addition, it wants the government to make it mandatory for people to opt in or out of guidance before accessing their defined contribution (DC) pension.
Alistair Wilson, a savings expert at Zurich, said: “With more people selecting drawdown over annuities, the government should introduce a UK-relevant safe withdrawal rate to help consumers manage their retirement savings accordingly.
“The Government Actuary Department already publishes GAD rates for capped drawdown, which could be made relevant for consumers in flexi-access drawdown and published on the new Single Financial Guidance Body’s website.
“While this might not be a silver bullet, it would act as a rough guide for those not getting advice,” Wilson said.
The research also found that one in ten UK adults not getting advice rely on search engines to help them navigate the complexities of drawdown, while one in five look at newspapers and magazines.
Pension firms were the leading source of guidance for 35% of consumers, although 44% of all those in drawdown confessed there is nothing that would prompt them to get advice or guidance.
