Industry experts have suggested that a blended retirement portfolio could ease pensioners' drawdown and volatility fears, after research from LV= found that 58 per cent of working adults, 19 million savers, do not know how to avoid running out of money in retirement.

The survey also found that over half (54 per cent) of workers with a defined contribution (DC) pension, around 7 million workers, are made anxious by fluctuations in the value of their pension.

In addition to this, over a third (37 per cent) of workers with a DC pension said that their preference would be to receive both a set income and have a pot of money to draw from in retirement, increasing to 47 per cent amongst those close to retirement (55-64).

However, LV= suggested that a blended retirement portfolio combining a fixed term annuity and a smoothed investment fund could help retirees avoid running out of money in retirement and addresses their concerns about stock market volatility.

The company argued that this approach also offers flexibility to advisers and their clients, as advisers can tailor a retirement portfolio for their clients that produces the required amount of guaranteed income and potential for future growth.

LV= retirement director, David Stevens, stated: “Drawdown customers often want the best of both worlds. They want to enjoy a certain level of income while retaining control over how they run their retirement funds but at the same time minimising the risk of a market crash causing them to run out of money in retirement.

“Blended annuity and drawdown portfolios are a way of balancing the trade-off between controlling a retirement portfolio to benefit from future investment growth while reducing the effects of market volatility.

“The idea of mixing annuity and drawdown solutions customised to an individual’s preference is not new, but the recent interest rate changes and stock market volatility has highlighted the importance of considering annuities as a way of underpinning a retirement income."

Despite these benefits, Stevens warned that this is not an option a customer can typically navigate on their own.

"High-quality financial advice is vital when constructing such solutions to ensure each customer is comfortable they have the right balance of risk and flexibility that is right for them in order to enjoy the retirement they want," he added.

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