Income drawdown should not only be the preserve of the wealthy, according to Rockingham Retirement.
The retirement income specialist's managing director, Steve Hunt, says it is unfair to limit peoples' options purely because they have a small pension pot
People approaching retirement with a small pension pot are often in danger of ‘giving away' their money to an insurance company, Hunt says.
"All too often, someone with a £30,000 fund will be forced to give their hard-saved cash to an insurance company in exchange for an annuity," he explains.
"However, if you die prematurely, perhaps just a few years after retiring, then you've basically given all your hard-earned savings to an insurance company."
Hunt believes everyone should have the option of using income drawdown, meaning they can pass-on any money they don't use to family members, and Rockingham has developed an income drawdown product for the mass market in response.
Rockingham's solution comes in the form of a basic bank account, with-profits fund and life settlement fund, contained in a SIPP wrapper for use in unsecured pension (USP) and alternatively secured pension (ASP) options.
The product is designed to be low cost, with no charges on the bank account allowing investors to access it for free.
"It is unfair someone with a small fund of £30,000 should be denied to right to pass on some of their money to family members in the event of their premature death," Hunt says.
The new product is due to be made available through Rockingham Retirement in November, and will be made available to IFAs around April next year.
Growth driven by platform business
No preferred charging model
To 1,552 families and businesses
HL and Liberty SIPP slowest
Lifetime and annual allowances