Retirement Outcomes Review comment’

Commenting on the FCA’s Retirement Outcomes Review Quilter Investors head of investments Anthony Gillham says:

“It is deeply concerning that the FCA’s own research shows that so many people are unaware of how their retirement savings pot is being invested. Whatever your income drawdown arrangement, it is crucial to make sure you have an investment strategy that is designed to preserve your capital for the long-haul and mitigate investment risks which need to be considered differently by investors in retirement compared to those investors saving for the future in ‘accumulation’. At the same time it also needs to provide stable growth to protect your spending power in retirement.

“Investors going into income drawdown face a wide range of investment risks which differ significantly from those they face when they are building up their pension pot during the accumulation stage.

“In accumulation, the usual ups and downs in the market present opportunities to ‘buy the dip’ to build up positions in assets you like. In total contrast a more volatile portfolio can be rapidly depleted where investors are taking retirement income during a downturn in the market. This is because the benefits of pound cost averaging are experienced in reverse during drawdown, with ‘pound cost ravaging’ eating away at pension pots on the downside.

“Equally concerning is the finding that around a third of non-advised customers are in cash or near-cash assets. This simply won’t provide the long-term growth required to preserve spending power throughout an individual’s retirement lifecycle. Retirees cannot rely on cash to protect them against the potentially damaging impact of inflation.”

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