Advisers want to see increased innovation on retirement income guarantees in the run-up to retirement and ahead of the new pensions flexibility in April 2015, new research from MetLife has revealed.
Its study among 114 specialist retirement advisers showed that 61 per cent want increased innovation on income guarantees, while 59 per cent would like to see more innovation in capital guarantees and 34 per cent who want to see providers lowering charges.
More than 70 per cent of advisers are also reporting a rise in calls from clients about retirement planning, with around 52 per cent of clients on average asking about alternatives to annuities.
The research supports the view that drawdown products will be regarded as default retirement products following the implementation of the pensions flexibility, with 87 per cent choosing variations on drawdown as the products most likely to ‘succeed’ under the new regime.
Unsurprisingly, 96 per cent of advisers said that annuities will be the biggest losers, with 50 per cent stating that investment-linked annuities will lose out and 49 per cent pointing to with-profits annuities as likely to suffer.
Specialist annuity firms have seen individual annuity sales plummet since the Budget.
Partnership’s results revealed annuities had fallen by around three quarters in the third quarter of this year, as it admitted a need to focus on diversifying the business model. Just Retirement has also reported a a 50 per cent fall in individual annuity sales.
In August, FTAdviser parent publication the Financial Times reported Prudential is planning to spend £100m developing further initiatives, in a bid to tackle falling annuity sales, including developing an online investment platform and launching Pru-branded Isas.
A report by pensions expert Ros Altmann on flexibility in retirement, sponsored by Metlife, also said new products for both accumulation and decumulation will be needed to adapt to the new flexible environment.
She highlighted that many savers will want certainty about future income and capital which could include the increased use of guarantees.
Dominic Grinstead, managing director at MetLife UK, said: “The government has laid the groundwork for an innovation revolution with its focus on impartial advice and pledge to change tax rules to encourage new thinking.
“Guarantees will play a major role in delivering pension flexibility and guaranteed drawdown will be a major focus of innovation across the market.
“The role of advisers has been massively enhanced by the pension changes and advice has a vital role to play in ensuring savers are aware of all their retirement income options.”
