When it comes to retirement products, drawdown is currently king. Figures from the Association of British Insurers (ABI) show that drawdown sales consistently beat those of annuities throughout 2016, while in September the Financial Conduct Authority (FCA) revealed that drawdown arrangements rose by 4 per cent during October 2016 to March 2017.

Despite commentators’ unanimous agreement on the necessity of advice, there are many individuals who still go into drawdown unadvised.

Anna Copestake commented:

“Are people – even those who, on the face of it, are financially savvy – really equipped to manage their drawdown pot in order to secure long-term stability? Are we confident that those members appreciate the need for, and are able to conduct, regular reviews of asset allocations, returns, costs and charges and relevant wider economic circumstances and then the projected impact on their retirement plans?

“Put bluntly, I’ll wager some of these members haven’t even heard of the safe withdrawal rate, never mind thought about whether it’s the right way to go.

“There is an advice gap that may mean people run out of money years before they expect to.”

Given drawdown’s popularity, Anna predicts further innovation, which will lead to further complexity in product design and fees. “We have to be careful what we wish for,” she warns.

Drawdown may have trumped it for now, but the humble annuity still has a vital role to play in the at retirement market. Annuity rates increased by 4.3 per cent in October, according to Moneyfacts, returning them to their July 2016 level. This may still be way below its pre-pension freedoms heyday, but it represents a mini revival following a tough third quarter in 2017, which saw rates fall by 6.4 per cent.

And with most economists forecasting further interest rate rises, rates could hit a steady upward trajectory, making annuities look a lot better value for money for savers.

This is good news, says Anna:

“The pension freedoms have got people thinking more widely about what their finances in retirement might look like, but for some, the traditional annuity, although not the trendy product now, may still be the best bet.”

Read Anna’s comments in Pensions Age (p58)