Gated property funds hit income drawdowns

Many property fund managers have banned savers from withdrawing money.

Savers withdrawing retirement income directly from their pension funds via income drawdown plans could face difficulties accessing cash if they have investments in commercial property funds, according to financial advisers.

Several fund managers have “gated” their property funds in recent weeks, banning savers from withdrawing money from the funds. The moves follow uncertainty about what the underlying property in the vehicles is worth amid the volatility caused by the Covid-19 pandemic.

With many income drawdown pension savers investing in property funds as a core holding, the restrictions mean a key part of their portfolio will temporarily be unavailable as a source of regular income.

Even worse, some drawdown plans are set up in such a way as to make all withdrawals impossible if any part of the portfolio is suffering such restrictions. As a result, savers could find themselves unable to draw down any pension income at all, even if they hold only a small proportion of their portfolio in a gated property fund.

Royal London, one drawdown provider that operates in this way, has now introduced new procedures to prevent savers being left with no income. 

However, financial advisers are pressing other providers to follow suit amid fears some savers could be left with no income at all until property fund restrictions are lifted.

Recommended

What’s behind New Zealand’s runaway house prices?
Property

What’s behind New Zealand’s runaway house prices?

House prices in New Zealand have hit record high and show no sign of slowing down. Nicole Garcia Merida looks at what’s going on.
16 Apr 2021
Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
Properties for sale with mountain views
Houses for sale

Properties for sale with mountain views

From a private residential estate in Pitlochry, Perthshire, to a family house in Santa Barbara, California, eight of the best properties with mountain…
16 Apr 2021
The minimum pension withdrawal age is set to rise – don’t get caught short
Pensions

The minimum pension withdrawal age is set to rise – don’t get caught short

From April 2028, the earliest age at which you can take money from your pension savings will rise to 57. It's vital that you understand the detail of …
13 Apr 2021

Most Popular

Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Lab-grown meat: the new agricultural revolution
Soft commodities

Lab-grown meat: the new agricultural revolution

Vegan alternatives are taking off, but the future of food technology lies in lab-grown meat – cultivating steaks and burgers from animal cells, says A…
16 Apr 2021