More than half of advisers have seen a rise in drawdown clients suffering cuts in income in the past 12 months, new research* by MetLife shows.

Up to 55% of advisers questioned in the nationwide survey say they have seen an increase in the past year in the number of clients using drawdown who have suffered or are facing reductions in the income they take.

Average losses advisers are reporting are 15% in income or capital but nearly a third of advisers say clients are reporting losses of 20% or more.

Drawdown investors have been hit by a combination of stock market volatility and changes to GAD rates for capped drawdown which limited maximum income to 100% of the equivalent annuity.

The GAD rate has been restored to 120% from March this year but stock market volatility has returned with the FTSE100 hitting five-year highs only to lose around seven per cent of its value since May 2013.

Advisers questioned by MetLife expect volatility to continue – around 24% believe the FTSE- 100 will fall significantly from its five-year highs during 2013.

Dominic Grinstead, Managing Director, MetLife UK said: “The relaxation of GAD rules is very welcome but it is clear volatility remains a major issue for people drawing a retirement income and for those saving for retirement.

“Advisers are reporting average losses in annual income of around 15% which is a significant reduction for anyone and particularly for people who have retired and need to maximise income.

“Flexibility is important when it comes to retirement income but certainty of income is potentially more valuable particularly when stock market volatility remains a very real threat.”

The research among advisers showed however that drawdown remains the most popular retirement income solution among advisers themselves despite the ongoing issues over volatility and rule changes. Around 60% of advisers say they would use drawdown in current conditions if they had to take an income now.

However 21% of advisers say they would use a combination of unit-linked guarantees, conventional annuities and potentially lifetime or enhanced annuities and 16% say they would delay making a decision.

MetLife has seen rapid growth underpinned by its Managed Wealth Portfolios which have grown to £1.011 billion under management in just 12 months after launching the new funds in partnership with world-leading asset manager BlackRock.

The successful launch has helped drive MetLife’s total funds under management in the UK to more than £3.5billion since launch in January 2007.