Can't get cash from your pension? Stop moaning!

Some are moaning their pension doesn't have a drawdown option

Updated: 
Compressing pension

We're only a week into pension freedom and already people are moaning that they can't get their money out.

Unfortunately, that's what happens when you push through revolutionary pension changes in a year; pension schemes just can't keep up.

There are lots of pension schemes run by insurers that do not offer drawdown and pretty much all employer schemes don't offer drawdown. The bad news is, going into drawdown (where your pension remains invested and you take income or lumps sums from it) is the only way to take your pension as cash.

Calculate your pension income options

Instead people are being told they can only buy an annuity from their existing pension provider or they have to transfer to a new pension scheme and then go into drawdown, both of which take time and money.

Stop moaning

People have been moaning that all pensions should be able to offer drawdown but for once, I'm on the side of the insurers. For a start, they've only been given a year to get ready for pension freedom and it's a lot more work than just agreeing to add a drawdown policy.

And secondly, why should they offer it? Scott Gallacher, an independent financial adviser at Rowley Turton, made a very good point with his car analogy (very fitting considering all the talk of Lamborghinis).

He likened pension freedoms to the speed limit being increased to 150mph but you've only got a sensible Volvo that won't get to that top speed. Should the car manufacturer spend money upgrading the engine of your car for free or should you go out and buy a car that can reach 150mph?

I think he makes a really fair point. Insurers never created pensions with the new freedoms in mind, they only worked on the rules that were available at the time.

I'm not saying you have to stick to your current pension provider buy an annuity but you do have the option to switch pensions and take drawdown – you're just going to have to pay for it.

Despite what retirees think, they cannot have it all; access to the their pensions, free transfers and free advice.

Some things have to be paid for and it's not a bad idea to get a little bit of a steer on your pension now to make sure that your savings can last you for the rest of your life.

Calculate your pension income options

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