Following the announcement of royal assent of the 2011 Finance Bill, more advisers and investors are likely to opt for flexible drawdown, says Alliance Trust Savings.
The market is likely to witness surge in demand for flexible drawdown on two occasions, the first following the royal assent, and the second in the early part of next tax year, said Steve Latto, head of pensions at Alliance Trust Savings.
“This (the second wave of demand) will come from individuals who have made a pension contribution in the current tax year which prohibits them from moving into flexible drawdown until the next tax year,”, said Mr. Latto.
As long as individuals receive a secure retirement income that meets the minimum income requirement of £20,000 per year, flexible drawdown allows individuals unlimited income from their pension savings.
From April this year, Alliance Trust Savings has been offering flexible income drawdown on both of their Select and Full SIPP (Self invested personal pension) products despite apprehensions from a number of other providers that a last minute rule change may effect a retrospective tax charge to their clients.
“Conversations with advisers have revealed that many have been awaiting approval of the Finance Bill before offering advice on flexible drawdown”, Mr. Latto said adding, “Alliance Trust Savings has seen a recent increase in the number of advisers speaking to our business development managers about producing flexible drawdown quotes.”