Metlife: 42% of clients look for annuity alternatives

Almost half of advisers’ clients are inquiring about alternatives to annuities, due to annuity rates being at near historic lows, research from Metlife has revealed.

The research revealed 42 per cent of 287 financial advisers have clients inquiring about other retirement income solutions.

One in 10 advisers said more than 80 per cent of their clients are asking about alternatives.

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Uncertainty surrounding future gilt yields and annuity rates, which remain at near historic lows, has convinced the majority of advisers to steer clear of putting their retirement fund into lifetime annuities with just 10 per cent saying they would invest entirely in a conventional or enhanced annuity.

Around 16 per cent said they would delay making a decision in current conditions with 21 per cent saying they would use a mix of drawdown, unit-linked guarantees and fixed-term annuities.

Drawdown remains the most popular retirement income solution for financial advisers.

Just one in 10 financial advisers said they would use their own retirement fund to buy a conventional or enhanced lifetime annuity in the current market.

Dominic Grinstead, managing director of MetLife UK, said: “Conventional and enhanced annuities will remain the most popular retirement income solution for the majority of pension savers for the foreseeable future.

“However it is striking that just one in 10 advisers themselves would rely on a conventional or enhanced annuity for their own retirement income in current market conditions.

“There is strong demand and growing interest in alternatives to conventional annuities and innovation is crucial in driving expansion in the retirement income solutions market.”