Already in Income Drawdown

And they said retirement was going to be easier.

If you are not confused by all the options you are facing and have to relearn them every year when you review it then you must have worked in pensions or you don't understand that you don't understand it. It took me quite a few meetings to fully get to grips with Drawdown when it first started so if you tell me you have no problem it is probably because you are only looking at the tip of the iceberg.

This doesn't matter so much if you have a good adviser who understands your needs and can confidently recommend the best course for you to take but someone I was asked to contact demonstrated that this does not always happen.

On reaching age 60 John had sufficient pension funds to buy an annuity of £18,000 but he decided to leave the money invested, he said he felt he might as well do this as he liked the company which he had been with for over 20 years. When I saw him at the age of 67 he could buy an annuity of £7,500 a year or continue with Drawdown.

John was a very cautious person who would have been happy with £18,000. But because he was cautious, the money that remained invested was in cautious funds, so the investment return did not keep pace with the amount he was drawing.

As this was his only source of Income and he had little savings he was in a dilemma. In hindsight the obvious answer was he should have bought an annuity at age 60. The options were spelled out to him in lots of small print but as a former Director of the company he was too embarrassed to admit he didn't really understand.

In the case above there was no pension solution but if John had simply talked to someone who recognised that he didn't really understand and who managed to explain it in terms he could understand he would be a lot better off now.

Here is a blindingly obvious statement that should be considered:

"If you are in Drawdown you cannot take out more than the investment is returning"

And another one:

"Drawdown really only works where you are prepared to take an investment risk because that is the only way the investment will keep up with the drawings"

And finally:

"You could end up worse off or you could end up better off so only do this if you are able to face the uncertainty"

I have many clients in Drawdown and they all reconsider the position at least once a year and every time there is a major change in their circumstances.

• When did you last really think about it? 

• When did you last review the performance of the funds where your pension is invested?

Since April 2006 the whole market has changed and you might be able to save some of the investment charges that are being made.