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With cash returns virtually zero, the delay has potentially been costly for some non-advised pension owners. The proposals were due to be put into force in August 2020, but the implementation date was put back to February 2021. The regulator also proposed that there would be specific warnings issued to those who held more than 50% of their drawdown fund in cash or cash-like investments. The FCA’s proposed solution to this was to mandate pension providers to provide a range of “investment pathways” for drawdown funds, based on the client’s objectives for their pension pot. The FCA concluded that its findings “strongly suggest that a significant number of non-advised consumers are likely to hold their funds in investments that will not meet their objectives for how they want to use that money in retirement”. As a result, one third of the non-advised users of pension drawdown held their entire drawdown fund in cash. Some pension providers were “defaulting” non-advised clients into cash or quasi-cash investments at drawdown. The table below shows an income drawdown example using a 200,000 pension fund, based on a retirement age of 55 with average market conditions: Target Income.Around one in three were unaware of where their drawdown money was invested.Many of these individuals were solely focused on taking their tax-free cash and paid little or no attention to the investment of the remaining funds to be used for drawdown.One aspect which particularly concerned the FCA was those pension owners who, having received various prompts to seek advice, decided to access their pensions through drawdown without taking advice. One of the less prominent delays has been a change to the Financial Conduct Authority (FCA) rules on pension drawdown.īack in June 2018, the FCA issued a consultation paper following a two-year review of the impact of the Pension flexibility reforms introduced in 2015. The Covid-19 pandemic has deferred many events of all sizes, from the Tokyo Olympics to millions of foreign holidays. From February new rules apply if you choose pension drawdown but do so without taking advice.