There are two main variations Mr Higham expects: guaranteed payment levels and payment levels that are adjusted based on actual investment returns.
Mark Stopard, head of product development at Partnership, says he anticipates there will be greater freedom to design products around consumers’ increasingly diverse needs. He says you may see products which offer ‘step downs’ (lower income in later life) or ‘step ups’ (higher income when people stop work).
There may be others which provide an element of guaranteed income but allow some of the fund to be invested to bolster returns, Mr Stopard adds.
“Going forward instead of a choice between annuity and drawdown, the advisers’ job will be to combine different elements to best fit their clients’ income requirements.”
