The government should publish safe withdrawal rates for retirees using flexi-access drawdown and make it mandatory for people to either opt in or out of guidance before accessing their defined contribution pension savings, Zurich has said.

The insurer’s recommendations come after it published research on flexi-access drawdown, which has found that two in five people using the retirement income product are withdrawing the same amount from their pension regardless of how the stock market performs.

Zurich has warned that not adjusting pension income levels could lead to retirees running out of private pension money too quickly. With more than 431,000 retirees using income drawdown to fund their retirement, Zurich estimates that as many as 176,000 people could be impacted if they do not alter their withdrawal rates.

The company has also found that a third of people using drawdown have no hands-on investment experience and 41 per cent have not received either financial advice or guidance, suggesting that many retirees may not be aware of the need to consider adjusting their income in volatile markets.

In its Drawdown: Is it working for consumers? report on the research, Zurich also revealed that 10 per cent of UK adults who are not getting advice rely on search engines to help them navigate the complexities of drawdown, while 20 per cent of them look at newspapers and magazines for help. Pension firms were the leading source of guidance for a 35 per cent of the cohort, although 44 per cent of all those in drawdown confessed that there is nothing that would prompt them to seek professional advice.

Zurich savings expert Alistair Wilson said: “When stock markets are volatile, retirees should be prepared to adjust their income to ensure they can sustain their pot throughout the course of their retirement. Setting the right level of income at different stages of retirement can be difficult, which is why speaking to a financial adviser or seeking guidance is important.

“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,” he added.

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