Prudential's Colin Simmons has said advisers should not rule out recommending income drawdown to clients despite the GAD rate's historic low.
The pension business development manager thought it would be unlikely new clients will suffer significant losses in the future compared to long- term investors experiencing June's rate of 2.25%.
Simmons said: "If you buy drawdown now, you're buying in when rates are low. So while that will give you a low starting income - it has reduced the amount of risk the client will face."
He believed if clients bought in today, gilt yields could potentially be higher in three years' time. He predicted improved confidence in Europe, which would produce better investment markets.
"For new clients you've got retiring, you shouldn't rule drawdown out," he said.
"The worry is that advisers put off recommending drawdown because of the experience of the last five years when they should still be considering it as one of their retirement suite of products."
Clients who invested in drawdown post A-Day have faced a "double whammy" of low GAD rates and a reduced GAD limit. This has reduced income in some cases by 55%, as clients come to their five year review.
Meanwhile new investors will have a lower downside potential and a minimum GAD rate floor of 2%, introduced by HMRC in January.
However, Simmons said there was choice available for those coming up to review: "We're trying to help advisers going through reviews at the moment, to say if your clients are looking to get higher incomes, they don't have to stay in drawdown. They could consider an investment backed annuity. That still allows you to max out on a higher income than you can get under the maximum GAD now. A lot of people are using investment backed annuities as exit strategies."
He continued: "So we're saying you should consider investment backed annuities if you want to go up to a maximum level of income and give yourself protection again inflation. Drawdown, if your client wants flexibility, death benefits and investment control."
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