The FCA have recently published their review of the Pension and Retirement Income market, drawing attention to the increased complexity of the decisions today facing those aged 55 or over.
The report has also revealed that, when it comes to making their decision about how to access their pension fund, consumers’ choices appear to be driven mainly by their age and the size of their pension pot.
The findings of the FCA review included…
- In the immediate aftermath of the pension freedoms, there was a surge in full cash withdrawals
- Around 97% of full cash withdrawals are made by those with a pension pot of less than £50,000. Around 90% are made by those with less than £30,000
- Consumer demand for annuities appears to increase up to pot sizes of £100,000
- A higher proportion of consumers aged 65-69 chose an annuity over drawdown in each of the past four quarters
Problems faced by clients today
The review of the Pension and Retirement Income market raised the issues that clients are facing following the pension reforms.
With people living longer lifespans, one problem is that throughout the accumulation stage, many people are finding it difficult to sufficiently balance their longevity with investment risks.
Then, as savers reach decumulation, they find that reaching a decision about how to take their retirement income can be “daunting and challenging”. This is due to the increased range of options under the new reforms and an ever-changing market.
In short, many savers are not efficiently working out how much they need to save to fund the lifestyle they wish to enjoy in retirement. Then, at the point of decumulation, they are being overwhelmed with the choices in front of them.
Importance of specialist guidance
Worryingly, the report states that: “A combination of inertia and the need to make complex decisions at decumulation may discourage consumers from shopping around for the best available option.”
Of course, the pension reforms were always going to make the decision-making process at retirement more complex for those approaching retirement with a defined contribution pension scheme.
The concern now, however, is that poor decision-making at decumulation could result in clients exhausting their funds, particularly given the trend (mentioned in the FCA’s review) to enter drawdown without advice.
It makes it all the more important to ensure your clients seek the guidance of an annuity specialist, like Retirement Line, before making a decision.
A comprehensive referral service for those seeking an annuity
In spite of the criticism levelled against annuities in the 2014 budget, there is still a considerable interest in annuities from retirees. This is no doubt due to their wishing to have a guaranteed income for the rest of their lives rather than their future income having to depend on uncertain investment returns. As people get older, they usually want less risk, not more!
The great news is that, as an introducer to Retirement Line, you can offer a fast and efficient annuity quotation and administration service for your clients, at no direct cost to you or them.
As the UK’s largest broker specialising in annuities alone (by turnover), we offer guaranteed quotations in a matter of seconds – even for the vast majority of enhanced quotes. The pricing of enhanced annuities has become so complicated that it is vital to ask the right medical questions to secure the highest rates. Our highly trained annuity specialists receive regular training from the UK’s leading enhanced providers resulting in over 80% of our enquirers securing an enhanced rate.
We can obtain instant quotes due to our systems being connected to those of the UK’s leading annuity providers. Together with our experienced staff using our automated IT admin systems, this makes our annuity process a truly hassle-free experience for all.
PLUS! Due to the volume of business we introduce to the UK’s leading annuity providers, we receive very attractive rates of commission (up to 3%), which we share with you in the form of a generous introducer fee.
Our service ultimately leaves you with more time to focus on the more profitable side of your business. It really couldn’t be simpler, or faster.
Start referring today
Join the thousands of IFAs who have registered to use our service and refer your annuity clients to Retirement Line now by calling 0800 1444 777 or refer your clients online here.
Did you know? Thanks to our specialist knowledge and access to some of the best rates on the market, your clients could achieve up to 75% more income – even more for those with very serious conditions - than the amount offered to them by their current provider.