Contributing authors: Nigel Pearce, Life & Pensions Director Brian Please, Life & Pensions Consultant Peter Scott, Technical Consultant

Transcription

1 RETIREMENT SURVEY 2015

2 2 Contributing authors: Nigel Pearce, Life & Pensions Director Brian Please, Life & Pensions Consultant Peter Scott, Technical Consultant

3 INTRODUCTION Welcome to the 2015 Annual Retirement Survey conducted by Equiniti. We first launched our annual Annuity Industry Survey in 2010 and have rebranded it this year to reflect the emphasis on the broader retirement agenda and not just annuities. 3

4 The introduction of Pension Freedoms in April 2015 is now taking effect. To reflect the new retirement income landscape, we have taken the opportunity this year to expand the respondents to the survey beyond providers and advisers to include pension schemes and wider market participants. We believe that this will offer added insight to the results given the changes to the retirement market. Everyone in the industry has had to anticipate and respond to immediate customer needs and assist them through their expectations of greater flexibility. In addition, every participant involved in the changing retirement market has had to assess the potential strategic and long-term implications of the Budget for themselves, their business and their customers/members. We are hoping this survey will give an informed view of what changes are taking place and what changes are still required given the status of the UK retirement market. Some themes from the survey are: Individuals are more aware of pensions and the need for retirement planning With increased flexibility and choice comes more decision making Drawdown has an increasing role, Annuities are still fit-for purpose and Equity Release will play its part Small pension pots will be accessed and used for a wider range of purposes As Director of Life & Pensions in Equiniti, I am responsible for ensuring we anticipate the needs of our clients and their customers. While customers needs have not fundamentally changed, the greater flexibility they have been given presents them with more choice to both get it right and wrong, whatever that might mean to each individual. As with the rest of the industry, we are working towards improving our clients customers overall outcomes. As always, we are grateful to all of the respondents who have shared their views and insights through their responses and extensive supporting comments. Their responses have also helped contribute to raising money for Age UK. Nigel Pearce Life & Pensions Director Pension Solutions Equiniti E: [email protected] M: Trustees, Advisers, Pension Wise and others need to continue to step up The Government are unlikely to turn back the clock 4

5 METHODOLOGY Equiniti Retirement Survey 2015 The 2015 Annual Retirement Survey was conducted between 28 May and 22 June The questions were defined by experts and a support team at Equiniti, and were based on current topics and debates in the industry, most notably arising from the Chancellor s Budget announcements. For 2015 we received 50 responses from renowned annuity professionals and commentators within a one-month period. Respondents scored each question and added comments in support of their answers where they could and wished to do so. All answers are treated confidentially; all published results preserve the anonymity of their respondents. We hope our analysis will provide retirement professionals with improved insight into the market whilst raising current opinion and concerns shared by many industry professionals. 5

6 EXECUTIVE SUMMARY Most customers approaching retirement still have as their primary requirement a guaranteed income stream for life. Do we now have to factor into this assessment the stability of the market & businesses, the risk of fraud, and lifestyle priorities than purely an individual s assessment of longevity? All actuaries will know Alistair Neill s Life Contingencies. In Chapter 2 it sets out the definitions of the fundamentals that underpin all life assurance products: Pure Endowments a payment made on a certain date in the future if the life is then alive. Annuities a series of payments made at equal intervals during the lifetime of a given life. Assurances a payment of a specified amount upon the death of the life assured. For those of us who have worked in the Life and Pensions industry for our entire careers it is hard to question why individuals cannot always see the value of an annuity in retirement just as much as they value term assurance in earlier life. I am a strong proponent of annuities and they undoubtedly have their place in retirement provision. This survey over the past six years has reinforced this position by those in the industry. 6

7 Equiniti Retirement Survey 2015 Perhaps mortality has to take its place alongside a wider range of risk factors individuals assess in their lives when it comes to financial planning: Mergers, acquisitions, closure of firms can undermine customer s confidence in any guarantees being honoured for their lifetime by a company today. The majority of DB pension schemes are not fully funded. Customers cannot assume their benefits are secure. The scale of government deficits leave customers uncertain as to the future impact on State Pension in their lifetime. Internet fraud, pension liberators and other scams are on the increase. What savings vehicles are secure these days, and customers are targeted and more vulnerable as they get older. Equiniti has been paying pensioners for over 175 years. Our brand, ownership and service model has evolved from the original Paymaster General. Our ability to continue to provide these services has to be fought for and won through competitive tenders. Our commitment to paying timely, accurate payments is itself a guarantee valued by each and every pensioner and annuitant every month. I hope the results of this survey continue to open our minds to the need for products and services to meet a more complex set of needs and risks than mortality itself. Brian Please Life & Pensions Consultant Equiniti Contracting cancer and other previously terminal illness are less likely to result in death than survival. Customers focused activity is to improve their health and perceived lifespan. 7

8 equiniti.com Equiniti is the trading name of Paymaster (1836) Limited. Registered Office: Sutherland House, Russell Way, Crawley, West Sussex RH10 1UH. Registered in England and Wales No Paymaster (1836) Limited is authorised and regulated by the UK Financial Conduct Authority.