"The best performing pension could produce more than three times more pension income than the worst performing one. The really bad news is that your pension fund is more likely to be amongst the bad than the good" The Observer
In simple terms, if interest rates rise then so will annuity rates. Maximum withdrawal limits from an Income Drawdown arrangement should also rise but this potential benefit can be illusory: if the fund value is not also increasing it might be quickly depleted by excessively high levels of regular withdrawals.
Interest rates may change, impacting on annuity rates. If annuity rates increase significantly a Drawdown member may decide to ‘cut and run’, using his invested fund to buy a conventional annuity. This might be particularly attractive to lower risk investors or those seeking to ‘lock in’ previous gains with little or no further risk.
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