It was widely expected that chancellor George Osborne would announce further changes to pensions but, much to the relief of many in the industry, there was no major shake-up this time round.
Pension freedoms continue to have an impact, however. Vince Smith-Hughes, retirement expert at Prudential, says: “The legislation’s importance cannot be overestimated, with the government describing the pension freedoms as ‘the most exciting change to our pensions system for a century’.”
Concerns that, faced with the prospect of being able to draw down money tax free from their pension pot on retirement, many retirees would run to their nearest Lamborghini forecourt have been unfounded.
Mr Smith-Hughes reveals: “Our research suggests the changes have boosted confidence – more than one in three, 34 per cent, of people retiring this year are more confident about their retirement. Providers always welcome legislation that encourages people to engage more in retirement planning.”
This year’s Budget was marked by the unveiling of the Lifetime Isa, or the Lisa as it has been dubbed, prompting many to observe this is the first step towards a Pensions Isa.
Research from the BlackRock Investor Pulse survey released at the end of March shows Britons rely heavily on Isas to fund their retirement, quoting 36 per cent of Isa holders intending to do just that.
Tony Stenning, head of retirement for Europe at BlackRock, observes of the Lifetime Isa: “Incentivising people upfront to save for a prolonged period of time – 45 years for a pension – is a good thing.”
He applauds the idea behind the reforms but admits when people are asked what they want to achieve from their lifetime income in daily retirement, they identify certainty and being able to meet living costs.
“In fact, they describe an annuity,” he points out. “The challenge with an annuity is less flexibility. Lots of schemes are working at giving people the flexibility to be able to land at different places or, indeed, combinations of places.
“Instead of landing at an annuity, could you land at an annuity to cover your non-discretionary spend? Could you land for a bit in cash and stay invested in the remainder?”
Mr Stenning emphasises there will still be a place for annuities, citing the US as an example: “In the US, there’s still a thriving annuity market because they’re used as a planning tool rather than a landing point.”
Unfortunately, the onus on savers to decide how to fund their retirement coincides with a low-yielding environment. The asset management industry has pushed multi-asset and multi-asset income funds as solutions for those trying to build sustainable pension pots.
Following the latest Investment Association figures for March 2016, Guy Sears, interim chief executive of the IA, says: “It is a sign of the times that, with changing pension regulation and uncertainty in the global economic outlook, multi-asset and absolute return products have been popular with retail investors.
“These sectors have grown in recent years as our members have reviewed existing products and introduced new funds to meet investors’ changing needs.”
But Mr Smith-Hughes warns there is still confusion about retirement income options. He calls on the industry and government to collectively ensure “people are provided with clear, concise information that they can access easily in order to learn more about the changes and the options open to them”.
Ellie Duncan is deputy features editor at Investment Adviser