Our survey, compiled using responses from 227 users of Intelliflo’s Intelligent Office (iO) adviser software, also showed around one in six (17%) believed that providers had been slow to respond to the opportunities the new rules offer, although just under two thirds (61%) recognised that the industry was caught by surprise and it will take time for new products to be developed.
When asked about the role for annuities, almost a third (31%) said they will need to offer better value if they are to survive, while over a quarter (27%) believed they still have an important role to play in retirement planning. Around one in seven (15%) said they are outdated and need to be replaced by innovative new products.
The survey also shows that almost three quarters (73%) of those polled believed that being able to take all money out of pensions will be of interest to many or some of their clients, with more than a quarter (26%) saying it will be of interest to many.
On the matter of clients taking a tax free cash lump sum from their pensions at a younger age, a third (32%) believed the changes make it more likely than a few years ago.
And when asked how that tax free lump sum might be used, just over one in 10 (11%) believed it would be invested in property, with almost one in three predicting it would be used to pay off debts (28%) or to improve their clients’ lifestyles, such as through holidays, a new car, new household goods (30%).
On the upside, two in five (40%) reported increased business for their firm as a direct result of the government’s new pension rules.
With this all in mind, our survey highlights the challenges faced by product providers in responding to the opportunities presented by the government’s new rules. While annuities still have a place, advisers are expecting new products that will offer alternatives to people who want more certainty around income during retirement.
In addition, the survey shows there is concern that significant numbers of people may not be able to resist the opportunity to spend their tax free lump sum well before retirement, leaving them with reduced funds to provide adequate investment to fund later life.
Jo Gilbey is Marketing Director at Intelliflo