Pensions - Articles - Drawdown clients need a Lasting Power of Attorney


Moore Blatch solicitors is warning advisers that all drawdown clients should have a Lasting Power of Attorney in place when they retire, or their clients must have explicitly indicated that they do not want one. This recommendation should be raised specifically with reference to the fact that drawdown requires ongoing management.

 Drawdown, unlike an annuity, requires the person to be able to manage their financial affairs throughout retirement, until their death. However, most clients will be unable to manage some, or all, of their financial affairs at some point during the retirement due to physical ill-health or a lack of mental capacity.
  
 LPAs allow a person to appoint a third party (attorney) to make decisions about their health & welfare and finance & property matters, if they no longer have the capacity to do so themselves. In the context of drawdown, this could include anything from managing their investments to the need for an income to be redirected in order to fund care needs.
  
 Moore Blatch warns that the take up of LPAs is still woefully low. Current data shows that just under one million LPAs have been taken out in England and Wales since 2012, which is a tiny number considering that there are around 1.5 million people aged over 85 and around 5 million aged over 75.
  
 According to Moore Blatch, there are a number of reasons why the take up of LPAs remains low in the general public, but these reasons should not apply to drawdown clients who must have received professional advice. The reasons for current lack of take-up include: a general lack of awareness of LPAs, a lack of willingness to accept that one might need an LPA, and the perceived and actual complexity of putting one in place.
  
 Fiona Heald, Head of the Court of Protection team at Moore Blatch solicitors, comments;
 “While we would argue that most people should have the security of a Lasting Power of Protection in place, we would expect virtually everyone who has chosen to manage their retirement finances personally to have one. Without an LPA a third party would not legally be allowed to instruct an adviser on any changes to a drawdown arrangement. We would also recommend that the LPA is drafted by a solicitor as there can be very serious consequences should an LPA be completed erroneously.”
  

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