A number of pensioners in income drawdown who have seen their payments fall by up to 50% have complained of potential adviser ‘mis-selling', a provider has said.
Dentons director of technical services Martin Tilley said his firm had been getting complaints from consumers who feel that income drawdown was "mis-sold to them".
Tilley explained an almost "perfect storm" of unpredictable economic factors and regulatory changes had resulted in income drawdown levels dropping by 40% to 50%.
The Financial Services Authority confirmed last year it would conduct a review on the advice given by IFAs on drawdown. However, Tilley added: "From contact with our introducing intermediaries, very few have been contacted by the FSA to date."
The factors affecting drawdown rates include the 2008 financial crash, which resulted in the quantitative easing programme which has pushed gilt yields to all-time lows. This was followed by HM Revenue & Customs removing the 20% uplift permitted on maximum pension calculation and revision to the Government Actuary's Department drawdown tables.
Tilley said while the pensioners concerned would be feeling the pinch, the term "mis-selling" could be overstating the situation.
He explained: "The substantial reductions that some individuals are experiencing now is obviously cause for concern and some grumblings have occurred at consumer level. Whether mis-selling is the right term, I'm not sure. I do have a great deal of sympathy with IFA's in this area.
"While IFAs will always do their best to predict and warn clients about possible scenarios in the future, predicting five years ago what we would have seen would have been challenging. Making sure that clients were aware that income levels may fluctuate based on criteria known and unknown would be the key.
"In many cases, interim reviews would have been conducted which may have forewarned the clients of the likely reductions. The FSA is reviewing this with the benefit of hindsight."
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