There is latent demand for new products: MetLife

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There is latent demand for new products: MetLife

There is a pipeline of latent demand for flexible pensions, which is starting to come through now the pension changes have come into effect.

Simon Massey, wealth management director for MetLife, said: “If you look at the annuity sales they were ticking along at a pretty steady pace and then fell off a cliff. While drawdown sales have increased, there is no way they have taken up that slack.

“We have got almost 12 months of latent demand that is going to come through.

“We have got pension freedoms, demand for flexibility and the financial markets at an all-time high, as well as the risk of the sequence of returns. It must be tough to be advising someone.”

He said while providers have built the flexibility for some products, and other providers have created new products for transfers, he expected more developments over the coming months.

Mr Massey added: “The traditional role of the pension is changing for some, but I think for most people it will remain the main provider of income in retirement.

“There will inevitably be further product innovation and innovation from advisers.”

Alistair McQueen, pensions policy manager at Aviva, agreed that the need for advice was greater than ever.

When asked what products Aviva had to meet the challenges arising from the flexibilities, he said Aviva would continue to evolve products and services over the year, in line with customers’ requirements and expectations.

This week, Canada Life’s new product range went live. The Pension Investment Plan, Flexible Drawdown Plan and the Fixed Term Income Plan allow individuals to take advantage of the new pension freedoms that became available from 6 April.

This includes the ability to draw funds directly from pension savings without moving into a drawdown contract or an annuity.

Adviser view

Daniel Smethurst, director of Greater Manchester-based JonSimon Financial Advice, said: “With demand for the flexibilities, I think it is going to be more of a gradual thing.

“There will be lots of coverage in the press about the changes, so some of the advertising for our services will come through those channels.

“A lot of people are coming in and having conversations with us with a view to getting professional advice.”